A:

It depends. If the beneficiary of your IRA is your spouse, he or she will be eligible to transfer the amount to his or her own IRA, from which distributions are not required until age 70.5.

If the beneficiary is not your spouse, then the options available may be determined by the provisions in the IRA plan document. Most IRA custodians follow the regulations and will allow beneficiaries to take distributions over their life expectancies. Under this life-expectancy method, beneficiaries are required to withdraw only a certain amount each year. But since IRA custodians are not required to follow the guidelines set in the regulations, some IRA custodians require beneficiaries to take a lump-sum distribution after the death of the IRA owner. You should check with your current IRA custodian immediately to determine the options it allows for your IRA beneficiaries. If the options are not consistent with your estate-planning goals, then you may want to consider transferring the IRA to an IRA custodian that provides the options you find acceptable.

See Inherited Retirement Plan Assets - Part One: Options for Beneficiaries and Inherited Retirement Plan Assets - Part Two: Important Dates for Beneficiaries for information on beneficiary options and calculating the minimum amounts that should be withdrawn each year under the life expectancy method.

This question was answered by Denise Appleby
(Contact Denise)

RELATED FAQS

  1. When can benefits be received from a provident fund?

    Find out when participants in provident funds can begin receiving benefits, including how funds can be used to finance important ...
  2. Is Social Security Income a perpetuity?

    Find out why Social Security income is not classified as a perpetuity, including what constitutes a perpetuity and the basics ...
  3. What types of investments are allowed in a provident fund?

    Read about the types of investments allowed in various provident funds around the world, including the Indian, Malaysian ...
  4. How does a provident fund compare to U.S. Social Security?

    Find out how provident funds compare to the U.S. Social Security program, including examples of income limits and contribution ...
RELATED TERMS
  1. See-Through Trust

    A trust that is treated as the beneficiary of an individual retirement ...
  2. Settlor

    The entity that establishes a trust. The settlor also goes by ...
  3. Backdoor Roth IRA

    A method that taxpayers can use to place retirement savings in ...
  4. Personal Representative

    The executor or administrator for the estate of a deceased person. ...
  5. Tax Deductible Interest

    A borrowing expense that a taxpayer can claim on a federal or ...
  6. Current Service Benefit

    The amount of pension benefit accrued by an employee who had ...

You May Also Like

Related Articles
  1. Retirement

    Does it Make Sense to Have an MLP in ...

  2. Entrepreneurship

    MLPs: How They Are Taxed

  3. Retirement

    Top Tips for Rebalancing 401(k) Assets

  4. Professionals

    Few Target-Date Managers Invest in Their ...

  5. Fundamental Analysis

    Should You Hire an Advisor or DIY Your ...

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!