We all make contributions to our individual retirement accounts (IRAs) with the intention of using those funds once we reach the age of 59 ½. However, life does not always go according to plan. When an IRA plan owner dies, the account is passed to his or her beneficiary. Often, this is a spouse or family member, but not always. When no beneficiary is named for the plan, the account will go through probate court. The Type of Account First, you should note what type of IRA plan you are receiving. In a traditional account, contributions are made with pre-tax dollars. This means that any withdrawals will be subject to income taxes. For inherited traditional IRAs, you must also start taking required minimum distributions (RMDs) by the age of 70 ½. (You should also note that you cannot contribute to an inherited traditional IRA after the age of 70 ½ either.) For Roth accounts, however, the contributions were made with post-tax dollars. Because the IRS cannot tax money twice, qualified withdrawals from these accounts are generally tax-free. Roth accounts also do not have RMDs and there are no age limitations imposed on contributions. The Beneficiary Options What happens to the account once it is passed to a beneficiary depends on who receives it. Spouses have the most options. As a spouse who inherits their significant other’s IRA, you can: Designate the account as your own (if you are the sole beneficiary) and treat is as if it is your own account Roll the IRA into your own like-type IRA account as a rollover and continue to contribute Take a distribution Non-spouses do not have these options. They cannot rollover the funds or continue to contribute to the account. In fact, the only option available to non-spouses are RMDs. If the original account owner had already started taking RMDs, the non-spouse must continue them. If they have not, the non-spouse inheritor must start taking RMDs by 31 December the following year after the original owner died. (You should also note that, as a non-spouse beneficiary, you have five years to cash out the entire IRA.) An Expert You Can Trust The professionals at Royal Legal Solutions understand how hard the loss of a loved one can be. After all, we have families as well. Our experts can help provide you with options and professional assistance during this trying time. With years of experience, we understand tax laws that may affect your RMDs and account options. If you would like to learn more about setting up your own retirement account or what to do with one you have inherited, please contact us today.