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Investing Specialists

What Are Your Options for an Inherited IRA?

Understand the tax and other implications when leaving IRA assets to spouse and nonspouse beneficiaries, charities, trusts, or your estate.

Owing to longer life expectancies and related long-term care costs, inheritances have flatlined in the U.S. over the past decade: Wealth transfers as a proportion of net worth dropped to 19% in 2007 from 29% in 1989. Just a tiny share of the population receives an inheritance of more than $100,000, according to a study from the Federal Reserve Bank of Cleveland.

Data is scant on the type of inheritances people receive: Many people receive their inheritances through the sale of real estate--often a parent's home--while others receive financial assets. As of mid-2015, 26% of U.S. households owned traditional IRA assets, while another 17% of U.S. households owned Roth IRA assets, according to data from the Investment Company Institute. It stands to reason that people who inherit financial assets--rather than property--are often inheriting IRAs.

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