Inherited IRA

An inherited IRA is a retirement account that is passed on to a beneficiary after the original owner dies. The beneficiary can choose to either leave the money in the IRA and continue to make contributions, or they can withdraw the money and pay income taxes on it.

There are two types of inherited IRAs:

* **Deemed IRA:** This is the default type of inherited IRA. In a deemed IRA, the beneficiary takes the place of the original owner for all tax purposes. This means that the beneficiary must start taking required minimum distributions (RMDs) from the IRA starting at the end of the year following the original owner's death. The RMDs are based on the beneficiary's life expectancy.
* **Stretch IRA:** A stretch IRA allows the beneficiary to spread out the withdrawals from the IRA over their own life expectancy. This can be a tax-advantageous option for beneficiaries who are young and do not need the money immediately.

There are a few things to keep in mind when considering an inherited IRA:

* The beneficiary must be a designated beneficiary of the IRA. This can be a spouse, child, grandchild, or other relative.
* The beneficiary must take required minimum distributions from the IRA starting at the end of the year following the original owner's death.
* The beneficiary can choose to roll over the inherited IRA into their own IRA, or they can leave it in the original IRA.
* The beneficiary can withdraw the money from the IRA at any time, but they will have to pay income taxes on the withdrawals.

If you are considering an inherited IRA, it is important to speak with a financial advisor to discuss your options.