Do you have to take yearly distributions from an inherited ira?

With an inherited IRA, you may need to make annual distributions regardless of how old you are when you open the account or you are required to fully distribute the account's assets within a specified number of years. If you inherit an IRA, you're generally required to take distributions from the account, which may be taxable. Taxes depend on the type of IRA in question and on the relationship between the beneficiary and the deceased. One of the important rules of hereditary IRA for beneficiaries who are not spouses is that all money in the account must be withdrawn by December 31 of the tenth year after the death of the original owner.

Also known as a beneficiary IRA, an inherited IRA is an account that contains the assets inherited from a deceased person's IRA. If the owner of an IRA died on April 1 of the year following the year he attained the RMD age, the undesignated beneficiary would be subject to an RMD based on the life expectancy factor of the original owner of the IRA. You should request an RMD for the year the IRA owner died if the owner had an RMD obligation that was not satisfied. If there are several beneficiaries, the IRA can be divided into separate accounts for each one, a wise choice if one of the beneficiaries is not a spouse, is subject to the 10-year rule, and the other is a spouse or belongs to one of the other special categories.

If you inherited an IRA from your spouse, you have the option to transfer the money to your own IRA or to an inherited IRA. The original owner of a Roth IRA never has to accept RMD, but those who inherit a Roth IRA do, unless they fall into one of the categories of exceptions. Inherited IRAs (investment retirement accounts) are accounts that a person opens with the funds bequeathed to them after the death of the owner of an IRA. If they have just put the deceased's IRA in their name or transferred the money to their own IRA, they only need to start withdrawing money when they turn 72, the standard rule of mandatory minimum distributions (RMD) IRAs.

The person or entity that inherits the IRA can be any person that the deceased person has named a beneficiary in the IRA documentation. Be sure to check the most recent tables when calculating your RMD, which can be found here under Calculating and taking your RMD, or check out the updated single life expectancy table for RMDs inherited from an IRA. If you inherit a Roth IRA, it's completely tax-free if the Roth IRA was held for at least five years. Starting in January, IRAs that have taxable withdrawals, such as traditional IRAs and SEPs, are still subject to taxation when withdrawn from their inherited counterparts.

Roth IRA owners don't need to accept RMDs throughout their lives, but beneficiaries who inherit Roth IRAs must accept RMD.