CPA Mons & CPA Dads Information Center concerning Inherited IRAs


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Converting an Inherited IRA to a Roth IRA

It depends on who you inherited the IRA from.

If you inherited it from your deceased spouse, you may roll over the funds into your own IRA and if you chose, convert your traditional IRA to a new Roth IRA.

Spouse beneficiaries have the most options when it comes to inheriting an IRA. In addition to rolling over the inherited IRA into their own IRA, spouses have the option to leave the funds in the decedent's name and continue to make deductible contributions to that account.

Distributions do not have to begin until the decedent would have reached age 70 1/2. If you inherited the IRA from anyone other than a spouse, however, you may not roll over the funds into your own IRA and consequently, would not be able to convert the account to a Roth IRA.

However, you will be able to take distributions from the inherited IRA, and while you will have to pay income taxes on any money withdrawn, you will not be subject to an early withdrawal penalty if you are older than 59 1/2.

Mary Beth at

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Before you learn about stretching your Inherited IRA, you need to understand IRA basics.  IRAs have been around for years.

Traditional IRAs allow you to invest a certain amount of before-tax earnings on a yearly basis. That reduces your current taxes because you don’t pay taxes on that money until you actually take it out later. The main benefit of your IRA is that it grows more quickly because you aren’t taking money out to pay taxes.

Company retirement programs like 401(k)’s work similarly. Sometimes companies will match a portion of their employees’ contributions, dramatically increasing the employee’s return. If your company matches any of your contribution make sure you take advantage of it!  When you change jobs or retire you can transfer the money from your 401(k) into your own IRA.

Roth IRAs allow you to invest after-tax dollars, but the earnings on a Roth IRA are never taxed.  You aren’t required to start taking money out of a Roth IRA at age 70 ½ like as in a traditional IRA.