Inherited IRA Rules Explained – 5 Questions With Fidelity – Fidelity Investments
Inherited IRA Rules Explained – 5 Questions With Fidelity
It’s common to inherit an IRA, yet many people aren’t fully aware of the impact it can have on their taxes. This episode of 5 Questions with Fidelity will help you understand the rules surrounding this type of inheritance. Key Takeaways:
- With inherited traditional IRAs, withdrawals are generally taxed at the beneficiary’s ordinary income rate. With an inherited Roth IRA, however, the beneficiary generally does not pay income tax on qualified withdrawals, provided the account has met the five-year holding requirement.
- Spouses can elect to either treat the decedent’s IRA as their own or roll it into one of their own existing IRAs. Either way, they don’t need to take any RMDs from the account until their own required beginning date.
- New rules have accelerated the time frame most people need to take distributions. Children who are not eligible designated beneficiaries must withdraw the entire inherited IRA within 10 years.
