Inherited IRA

Inherited IRAs are specifically designed for IRA beneficiaries. They offer an opportunity to continue tax-deferred growth of IRA or qualified Profit Sharing Plans (e.g. 401(k)). All Inherited IRAs are subject to annual IRS minimum required distribution (RMD) rules, but these are generally based on the inheritor’s own life expectancy. This enables continued investment in an Inherited IRA without the impact of immediate taxes, so that you can potentially maximize these inherited assets.

What if You Inherit an IRA?

There are four options for Inherited IRAs. Make sure you speak with your tax advisor to determine which one of the options may be right for you.

1. Transfer the money to your own account (for spouses only).
As a spouse you have the most options when it comes to inherited IRAs. If you inherit a retirement account from your spouse, you can transfer the assets into a retirement account of your own. The distribution rules (when and how you can take the money) are the same as if the account had always been yours. As a spouse you are also eligible for the following options.

2. Transfer the money to an Inherited IRA.
This is typically done if you inherit from someone other than a spouse, but spouses can also open an Inherited IRA. The money in an Inherited IRA can continue to grow tax deferred, and you can generally start withdrawing it immediately without paying a penalty. You may have to pay taxes on the withdrawals dependent on the type and age of the IRA. You may take as much money as you want each year however you will be required to withdraw specified amounts (known as Required Minimum Distributions, or RMDs).

3. Take all the money now.
Taking a taxable distribution all at once may push you into a higher tax bracket. The money from the inherited account may be taxable income depending on the type of IRA and whether the contributions were pre-tax or post-tax. If you choose to take all the money now, an inherited IRA will be opened in your name to ensure that tax information is correctly reported to the IRS, and then you can choose to take the money in a single lump sum.

4. Choose not to take the money.
If you prefer to allow the assets to pass to alternate beneficiaries—perhaps you don’t need the money or to avoid tax implications—you can choose to “disclaim” the account. To do so, you need to act within nine months of the original owner’s death and before you’ve taken possession of the assets. This is done in many cases so that younger beneficiaries can use the tax benefits for a longer period of time and the RMDs are less in many cases.

Opening a CamaPlan Inherited IRA

After you have determined how you will manage your Inherited retirement account and you may want open an Inherited IRA and transfer the inherited assets into the account.

Use the buttons below to:

  • Open your beneficiary IRA, in order to transfer ownership from deceased to beneficiary.
  • Calculate any changes to the Required Minimum Distribution from the IRA based upon the beneficiary’s or beneficiaries’ life expectancy.
  • Arrange for distributions to surviving spouse and/or beneficiaries.

Investment Opportunities

The IRS prohibits self-dealing or transactions with certain disqualified persons (family, beneficiaries, or a fiduciary) in the investment of IRA funds. Otherwise, there are few restrictions on investment. By placing your IRA with CamaPlan, you have access to an unlimited number of alternative investment options, including real estate, gold and silver, business ventures, and loans.

CamaPlan Services and Fees

As administrator for qualified tax-deferred and/or tax free accounts, CamaPlan has responsibilities to our clients, including employers, employees, and government taxing authorities, which we execute promptly, professionally, and cost-effectively.

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