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Spouse Beneficiary

If you inherit a self-directed retirement plan from your spouse, you may treat the account as your own.

Non-Spouse Beneficiary

You must distribute holdings on a schedule of your choosing if you inherit an account from a non-spouse.

Invest

You may buy, sell, or exchange alternative IRA investments within an Inherited IRA upon receipt.

Inherited IRA Rules

When an account holder passes away, the IRA and its holdings will be issued to the beneficiary or beneficiaries previously designated by the decedent. An Inherited IRA retains the tax benefits of the original self-directed retirement plan (Inherited Traditional IRA, Inherited Roth IRA, etc.).

IRA cash and assets can become the personal property of inheriting beneficiaries if proper distribution procedures are followed. Spouse beneficiaries may treat inherited accounts as their own without any special limitations on contributions, distributions, or transfers.

Non-spouse beneficiaries may distribute inherited accounts all at once, take annual required minimum distributions (RMDs), or gradually distribute holdings over a five-year period. Non-spouse Inherited IRAs may only be combined with accounts inherited from the same decedent and by the same beneficiary. You may not make contributions to a non-spouse Inherited IRA.

Account Title

An Inherited IRA must identify the original account holder as well as the inheriting benefiticary in its title:
New Direction Trust Company FBO [beneficiary] bene [decedent] dcdt. Inherited IRA

EXAMPLE: New Direction Trust Company FBO John Smith bene Sarah Smith dcdt. Inherited IRA
(John inherited the account from Sarah)

NOTE: Titles that include "Beneficiary IRA" or "BENE IRA" are also acceptable.

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