Other IRAs

Learn more about additional types of IRAs that Schwab offers, such as Inherited IRAs and Custodial IRAs.

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What is an Inherited IRA?

An Inherited IRA, or a Beneficiary IRA, is an account that is opened when someone inherits an IRA or employer-sponsored retirement account after the original owner's death.

As a beneficiary, you can't make additional contributions. Still, the funds can remain tax deferred, and you can generally withdraw money right away without penalty. However, a designated beneficiary is generally required to liquidate the account by the end of the 10th year following the year of death of the IRA owner.

There are some exceptions for certain eligible designated beneficiaries, but please keep in mind there are tax implications if funds remain in the account after the 10-year mark. Contact your accountant or tax advisor to learn more about what makes sense for your circumstances.

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What benefits do Inherited IRAs provide for your retirement?

  • Tax-deferred growth

    If you open an Inherited IRA instead of taking a lump-sum distribution, you can continue to take advantage of potential growth in a tax-advantaged account.

  • Withdrawals on a set schedule

    Periodic distributions can be set up to reoccur automatically, including Required Minimum Distributions (RMDs) if you are required to take them.

  • Spreading out your IRA distributions

    It may be possible to take smaller distributions over time, which can help you preserve assets longer and spread out tax liability.

Ready to open an Inherited IRA?

What is a Custodial IRA?

A Custodial IRA is an account that a custodian (typically a parent) holds for a minor with earned income. 

Once the Custodial IRA is open, all assets are managed by the custodian until the child reaches age 18 (or 21 in some states). All funds in the account belong to the child, allowing them to start saving money early. 

In addition to reaping the benefits of compounded growth, your child may be able to use the funds for future expenses like college tuition or even to buy a first home. You can open either a Custodial Roth IRA or Custodial Traditional IRA, and the respective account benefits and rules apply.

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What benefits do Custodial IRAs provide for retirement?

  • Control of the account until your child turns 18 (or 21 in some states)

    You can choose from a Roth IRA or a Traditional IRA.

  • Penalty-free withdrawals

    The funds can be used to cover qualified expenses, such as college tuition, a down payment on a home, or even retirement.

Ready to open a Custodial IRA?

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    Fees and commissions

    Regardless of your account balance or how often you trade, you can open an account with a $0 minimum deposit plus get $0 online listed equity trade commissions.2

1. Schwab Satisfaction Guarantee: If you are not completely satisfied for any reason, at your request, Charles Schwab & Co., Inc. 
("Schwab"), Charles Schwab Bank, SSB ("Schwab Bank"), or another Schwab affiliate, as applicable, will refund any eligible fee 
related to your concern. Refund requests must be received within 90 days of the date the fee was charged. Two kinds of "Fees" 
are eligible for this guarantee: (1) "Program Fees" for the Schwab Wealth Advisory ("SWA"), Schwab Managed Portfolios™ ("SMP"), 
Schwab Intelligent Portfolios Premium® ("SIP Premium"), and Managed Account Connection® ("Connection") investment advisory 
services sponsored by Schwab (together, the "Participating Services"); and (2) commissions and fees listed in the
Charles Schwab Pricing Guide for Individual Investors or the Charles Schwab Bank Pricing Guide.

 

For more information about Program Fees, please see the disclosure brochure for the Participating Service, made available 
at enrollment or any time at your request. The Connection service includes only accounts managed by Charles Schwab Investment 
Management, Inc., an affiliate of Schwab. The guarantee does not cover Program Fees for accounts managed by investment advisors 
who are not affiliated with Schwab or managed by Schwab-affiliated advisors outside of the SWA, SMP, SIP Premium, and Connection 
services. The guarantee is only available to current clients. Refunds will only be applied to the account charged and will be credited 
within approximately four weeks of a valid request. No other charges or expenses and no market losses will be refunded. Other 
restrictions may apply. Schwab reserves the right to change or terminate the guarantee at any time. 

 

2. Standard online $0 commission does not apply to over-the-counter (OTC) equities, transaction-fee mutual funds, futures, 
fixed-income investments, or trades placed directly on a foreign exchange or in the Canadian market. Options trades will be 
subject to the standard $0.65 per-contract fee. Service charges apply for trades placed through a broker ($25) or by automated 
phone ($5). Exchange process, ADR, and Stock Borrow fees still apply. See the Charles Schwab Pricing Guide for Individual Investors 
for full fee and commission schedules.

 

This tax information is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. 
Where specific advice is necessary or appropriate, Schwab recommends that you consult with a qualified tax advisor, CPA, 
financial planner, or investment manager. Depending on the type of account you have, there are different rules for withdrawals, 
penalties, and distributions. Please understand these before opening your account.

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Common questions

Inherited IRA

It helps to have the following information on hand:

 

  • Your Social Security number
  • Your driver's license number
  • Your employer's name and address (if applicable)
  • Statement information for funds you may want to transfer
  • Notarized Affidavit of Domicile
  • Copy of the death certificate and letters testamentary
  • If you inherited a Schwab IRA: Schwab Inherited IRA Distribution Form
  • If you inherited a Schwab QRP or Individual 401(k): Qualified Retirement Plan (QRP) and Keogh Distribution Request Form 

Schwab will send you your account number as soon as your application is completed and approved. You can use your account number to log in to Schwab.com and manage your account.

Anyone (a spouse, non-spouse, or entity) who has inherited the assets of an IRA or employer-sponsored retirement plan is eligible to open an Inherited IRA. Eligible IRAs include Traditional, Rollover, SEP, SIMPLE, and Roth.

Yes. You can transfer the existing IRA into your name and defer distributions until you are required to take the Required Minimum Distribution (RMD). If you plan to take a distribution before you reach age 59½, you can open an Inherited IRA. Consult your tax advisor for more details.

No. Only spousal beneficiaries can treat Inherited IRA assets as their own.

No. As a non-spouse beneficiary, you cannot leave the assets in the original account holder's IRA and continue distributions from that account. You can either transfer the assets into an Inherited IRA or take a lump-sum distribution.

No. Contributions to Inherited IRAs are not permitted.

It depends on your beneficiary classification and how you choose to take distributions over time. If you are an Eligible Designated Beneficiary and you choose to take distributions over your lifetime, you will need to begin taking Required Minimum Distributions (RMDs) by December 31 of the year after the original account holder passes away (unless you are a spouse beneficiary and the original account holder had not yet reached RMD age), as well as any RMDs the original account holder did not take in the year they died. Otherwise, you are generally not required to begin taking distributions right away but may need to fully distribute the account within a certain number of years. Consult your tax advisor or visit our Inherited IRA Withdrawal Rules page for more details.

Yes. If you open an Inherited IRA, certain rules determine when you must begin taking distributions and/or when all of the assets must be distributed from the account. These rules are based on your beneficiary classification and relationship to the original account holder, the age of the original account holder at the time of their death, and whether they died prior to Jan 1, 2020. These rules are complicated, so we recommend that you consult your tax advisor for more details. You can also visit our Inherited IRA Withdrawal Rules page.

Common questions

Custodial IRA

It's quick and easy to open a Schwab Custodial IRA. Download a Schwab Custodial IRA application. It helps to have the following information on hand before you open an account:

  • Your Social Security number
  • Your driver's license number
  • Your employer's name and address (if applicable)
  • Statement information for funds you may want to transfer

Once you have completed your application, mail it to:


Charles Schwab & Co., Inc. 
Attn: IS Document Control 
P.O. Box 982600 
El Paso, TX 79998-2600

Schwab will send you your account number as soon as your application is completed and approved. You can use your account number to log in to Schwab.com to manage your account.

Only Traditional IRAs and Roth IRAs can be Custodial IRAs.

Yes, you can transfer a Custodial IRA to Schwab from another institution.

No. All contributions made into the Custodial IRA are considered irrevocable transfers for the benefit of the child.

No. The same contribution and distribution rules that apply to Traditional and Roth IRAs also apply to Custodial IRAs.

Yes. The funds can be used to cover qualified higher education expenses, as long as the educational institution is eligible to participate in the Department of Education's student aid programs. Learn more about Education Savings Accounts and the 529 Savings Plan.

As the custodian, you control the assets in the Custodial IRA until your child reaches the age of 18 (or 21 in some states). At that time, you must turn the assets over to the minor.

Questions? We're ready to help.