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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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.

You do have to take Required Minimum Distributions (RMDs) from an Inherited IRA, the timing of which is based on the age of the original account holder. The amount of the RMD is based on your own life expectancy and the account value. However, by taking out only the RMD amount each year, you can continue to grow the financial life of your Inherited IRA, and can pass it in turn to your own heirs. Eligible IRAs that can be transferred into an Inherited IRA include Traditional, Rollover, SEP, SIMPLE, and Roth IRAs.

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

  • A way to continue to shelter any potential growth in a tax-advantage account

    The funds can remain tax-deferred, and can generally be withdrawn right away without a penalty.

  • Withdrawals on a set schedule

    Required Minimum Distributions (RMDs) can be set up to reoccur automatically.

  • Stretching an IRA option

    It may be possible to take smaller minimum distributions overtime which can help you preserve assets longer.

Fees and commissions

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

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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.

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