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What if You Inherit an IRA? If you inherit a traditional IRA, you are called a beneficiary. A beneficiary can be any person or entity the owner choo- ses to receive the benefits of the IRA after he or she dies. Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive. Inherited From Spouse If you inherit a traditional IRA from your spouse, you gen- erally have the following three choices. You can do one of the following. 1. Treat it as your own IRA by designating yourself as the account owner. 2. Treat it as your own by rolling it over into your IRA, or to the extent it is taxable, into a: a. Qualified employer plan, b. Qualified employee annuity plan (section 403(a) plan), c. Tax-sheltered annuity plan (section 403(b) plan), or d. Deferred compensation plan of a state or local government (section 457 plan). 3. Treat yourself as the beneficiary rather than treating the IRA as your own. Treating it as your own. You will be considered to have chosen to treat the IRA as your own if: • Contributions (including rollover contributions) are made to the inherited IRA, or • You don’t take the required minimum distribution for a year as a beneficiary of the IRA. You will only be considered to have chosen to treat the IRA as your own if: • You are the sole beneficiary of the IRA, and • You have an unlimited right to withdraw amounts from it. However, if you receive a distribution from your de- ceased spouse's IRA, you can roll that distribution over into your own IRA within the 60-day time limit, as long as the distribution isn’t a required distribution, even if you aren’t the sole beneficiary of your deceased spouse's IRA. For more information, see When Must You Withdraw As- sets? (Required Minimum Distributions) in Pub. 590-B for more information on required minimum distributions. Inherited From Someone Other Than Spouse If you inherit a traditional IRA from anyone other than your deceased spouse, you can’t treat the inherited IRA as your own. This means that you can’t make any contributions to the IRA. It also means you can’t roll over any amounts into or out of the inherited IRA. However, you can make a trustee-to-trustee transfer as long as the IRA into which amounts are being moved is set up and maintained in the name of the deceased IRA owner for the benefit of you as beneficiary. See Pub. 590-B for more in- formation. Like the original owner, you generally won’t owe tax on the assets in the IRA until you receive distributions from it. You must begin receiving distributions from the IRA under the rules for distributions that apply to beneficiaries. More information. For more information about rollovers, required distributions, and inherited IRAs, see: • Rollovers, later, under Can You Move Retirement Plan Assets, • When Must You Withdraw Assets? (Required Mini- mum Distributions) in Pub. 590-B, and • The discussion of IRA Beneficiaries under When Must You Withdraw Assets? (Required Minimum Distribu- tions) in Pub. 590-B. Can You Move Retirement Plan Assets? You can transfer, tax free, assets (money or property) from other retirement programs (including traditional IRAs) to a traditional IRA. You can make the following kinds of transfers. • Transfers from one trustee to another. • Rollovers. • Transfers incident to a divorce. This chapter discusses all three kinds of transfers. Transfers to Roth IRAs. Under certain conditions, you can move assets from a traditional IRA or from a designa- ted Roth account to a Roth IRA. For more information about these transfers, see Converting From Any Tradi- tional IRA Into a Roth IRA, later in this chapter, and Can You Move Amounts Into a Roth IRA? in chapter 2. Transfers to Roth IRAs from other retirement plans. Under certain conditions, you can move assets from a qualified retirement plan to a Roth IRA. For more information, see Can You Move Amounts Into a Roth IRA? in chapter 2. Page 20 Chapter 1 Traditional IRAs