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What To Do With An Inherited IRA
IRAs are among the largest assets inherited by heirs and beneficiaries. These accounts have been able to grow to such large amounts because income taxes are deferred until the owner begins to take distributions, usually after reaching age 70 ½.
If you inherit an IRA you must be very careful to follow the rules, which are complicated and often confusing. It is possible to keep an account growing tax-deferred for decades, but an innocent error can cause the recipient to lose the tax-deferred advantage and force him or her to pay tax now on the entire account balance. As a result, it is critical to talk with an expert before making any decision or taking any action, and to understand all available options. Here are some rules to consider.
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Organize Information for Your Family
Think for a few moments about what would happen if you suddenly became incapacitated or died. Would your spouse or family know what to do? Would they know where to find important records, assets and insurance documents? Would they be able to access (or even know about) online accounts or files on your computer? Would they know whom to ask if they need help? Putting the effort in now to establish a formal document inventory can alleviate unnecessary anxiety and turmoil in the future.
The Key Takeaways
- If you should suddenly become incapacitated or die, your family would need to know where to find the information they would need.
- Let your key relationships know where to find your document inventory.
- Do not assume your process will be readily understood by others; have a trial run to make sure they can find and understand your records.
- Keep your inventory current with an annual review.
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 Is It Time to Take Action?
Contact us and find out how easy it is to set your estate plan up. You'll sleep better at night knowing things are taken care of the way you want.
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