4 Ways to Make the Most of an Inherited IRA

Here are four strategies to consider when taking on a deceased loved one's IRA account.

(Image credit: ratmaner)

Inheriting an IRA comes at one of the most tumultuous times in life, when you're dealing with the death of a loved one. But decisions you make about how to handle the account can make a big difference in how much it will be worth to you. If you inherit the IRA from a spouse, you have the most options, including the right to simply claim the account as your own. Nonspouse heirs don't have that opportunity. Instead, these are the strategies to consider.

1. Retitle the account. Because you can’t roll the money into your own IRA, you must create a properly titled inherited IRA. "It must include the name of the decedent and the beneficiary, clearly identifying who is who," says Denise Appleby, chief executive officer of Appleby Retirement Consulting, in Grayson, Ga. For example, the account could be retitled to "Mary Smith (deceased August 8, 2016) IRA for the benefit of Joe Smith." You should also name successor beneficiaries.

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Rachel L. Sheedy
Editor, Kiplinger's Retirement Report