Summary
When you die, your IRA typically passes directly to your named beneficiaries, not through your will, making beneficiary designations crucial. Heirs must move the funds into an inherited IRA and follow strict withdrawal rules. Spouses have the most flexibility, including rolling the account into their own or delaying withdrawals. Most non-spouse beneficiaries must empty the account within 10 years under SECURE Act rules. Taxes depend on the IRA type—traditional withdrawals are taxable, while Roth withdrawals may be tax-free. Missing deadlines can trigger steep penalties, so heirs should plan withdrawals carefully to minimize taxes and preserve as much of the inheritance as possible.
The Motley Fool
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