Inherited IRA

Transfer your inherited retirement account to an Inherited IRA to enjoy tax-deferred growth and no early withdrawal penalty.

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View important information about our online equity trades and Satisfaction Guarantee


1. 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.

2. 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. No other charges or expenses, and no market losses will be refunded. Refund requests must be received within 90 days of the date the fee was charged. Schwab reserves the right to change or terminate the guarantee at any time. Go to schwab.com/satisfaction to learn what’s included and how it works.


What is an Inherited IRA?

An Inherited IRA, or a Beneficiary IRA, is an account that is opened when someone inherits an IRA or employee-sponsored retirement plan after the death of the original owner. As a beneficiary, you can’t make additional contributions, but with an Inherited IRA the funds can remain tax-deferred, and you can generally withdraw money right away without a penalty. Inherited IRAs are typically opened for non-spouse beneficiaries, as spouses can transfer inherited assets directly into their own personal retirement accounts (although spouses can open an inherited IRA as well if they choose).

The rules for if/when you must begin taking Required Minimum Distributions and/or distribute all the account assets depend on your beneficiary classification:

  • Eligible Designated Beneficiary (spouse or minor child of the original account holder, or an individual that is disabled, chronically ill or no less than 10 years younger than the original account holder)
  • Designated Beneficiary (most other individuals)
  • Non-Designated Beneficiary (trusts and organizations)

There are additional nuances based on your exact relationship to the deceased, when they died, and their age at the time of their death. For more information, please read our Inherited IRA withdrawal rules page or consult your tax advisor.

Ready to get started? Read on for more account details and what you need to know before opening an Inherited IRA. 


Advantages of an Inherited IRA

  • 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.

Fees and commissions

Open an account with a $0 minimum deposit plus get $0 online listed equity trade commissions3, regardless of your account balance or how often you trade.

View important information about our fees and commissions


3. 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.

Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges, and expenses. You can request a prospectus by calling 800-435-4000. Please read the prospectus carefully before investing.

Schwab ETFs are distributed by SEI Investments Distribution Co. (SIDCO). SIDCO is not affiliated with Charles Schwab & Co., Inc.


On-page-disclosure

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.

Benefits of an Inherited IRA with Schwab

  • Retirement planning tools and resources

    Schwab offers planning resources, calculators and retirement income strategies, to help you plan for the future.

  • Investing insights

    Stay informed with the latest market commentary, insights, and investing ideas from Schwab experts. 

  • Get support 24/7 + convenience of 300+ branches

    Call our financial professionals anytime. Plus get local support at a branch near you.

Common questions

Have questions about our Inherited IRA? Here are responses to some of the most common questions we hear. If you have a specific question that's not answered here, please call us at 866-855-5635.

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 

We'll 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 IRAs.

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 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.

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