So, You Have Inherited a Traditional IRA -- Now What?
The time of inheriting a traditional IRA may be occupied by a range of mixed emotions, from grief for a lost loved one to the joy of receiving a windfall of money that you may not have expected. When you inherit an IRA, then you are a “beneficiary” for purposes of federal tax rules. A beneficiary can be a person or an entity, such as a trust, and that beneficiary must choose how to receive the benefits of the IRA after the original owner passes away. Beneficiaries of a traditional IRA must include any taxable distributions they receive in their gross income. Therefore, consulting with a tax advisor can help you understand your options for choosing the distribution method that best suits your financial situation and minimizes your tax liability.
