How to Retitle an IRA When a Successor Beneficiary Inherits the IRA

By Michael Keenan

If you inherit an IRA from your spouse, you can roll it over to a new IRA in your name or merge it with your own existing IRA. Unlike non-spouse beneficiaries, you can keep contributing to it. Everyone has the option to cash out an inherited IRA in a lump sum; however, this could result in a large tax bill. Generally, the IRS permits beneficiaries to withdraw the balance of the account in required minimum distributions each year based on the beneficiary's age or withdraw the entire amount within five years. Whatever you decide to do with your inherited IRA, unless you’ve inherited it from a spouse, you must re-title it. This ensures that the tax-reporting forms for future distributions are appropriately titled.

If you inherit an IRA from your spouse, you can roll it over to a new IRA in your name or merge it with your own existing IRA. Unlike non-spouse beneficiaries, you can keep contributing to it. Everyone has the option to cash out an inherited IRA in a lump sum; however, this could result in a large tax bill. Generally, the IRS permits beneficiaries to withdraw the balance of the account in required minimum distributions each year based on the beneficiary's age or withdraw the entire amount within five years. Whatever you decide to do with your inherited IRA, unless you’ve inherited it from a spouse, you must re-title it. This ensures that the tax-reporting forms for future distributions are appropriately titled.

Step 1

Inform the financial institution of the death of the account owner. The financial institution will typically require a death certificate.

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Step 2

Request the forms from the financial institution required to retitle the IRA in your name. The forms may vary slightly from institution to institution.

Step 3

Complete the form with your name, Social Security number and birthday. The name of the decedent, decedent's Social Security number and decedent's birthday are also required.

Step 4

Submit the form and verify that the IRA is retitled appropriately. Retitled IRAs will have the name of the decedent, date the decedent died and beneficiary's name. For example, if James Sithe died on February 20, 2011, and left his IRA to Jake Sithe, the retitled IRA would read, "James Sithe, deceased Feb. 20, 2011, FBO Jake Sithe, Beneficiary." “FBO” indicates “For the Benefit Of.”

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Inherited IRA Beneficiary Management Guide

References

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