Ask MissionSquare Retirement: What steps do I need to take when I inherit a retirement account?

Even if you don't plan to retire for a long time, you may inherit a retirement account from a parent, grandparent, or other relative who passes away. If you're the beneficiary of a retirement account, you'll need to take some key steps to transfer the account to your name and make decisions that could affect the tax benefits.

After the original account owner dies, contact the financial-services firm that administers the account to find out what steps you need to take. Beneficiaries of MissionSquare Retirement accounts, for example, need to submit a copy of the participant's death certificate as well as an application to transfer the assets into an account for the beneficiary.

Once the account has been transferred, you should ask for a beneficiary designation form in order to establish your own beneficiaries. Then, you should also review the investments for suitability purposes; you may have a different investing time frame and risk tolerance than the original owner, especially if you're much younger. It's a good idea to consult with your financial advisor for guidance on how to invest the money and when to start taking withdrawals.

You'll usually need to take required minimum distributions by Dec. 31 starting in the year after the original owner died (based on a special life expectancy table for beneficiaries of inherited IRAs, either traditional or Roth; see IRS Publication 590-B at www.irs.gov for the calculation), or withdraw all of the money in the account within five years after the original owner's death. You won't have the five-year option, however, if the original IRA owner was over 70½.

Have a question for us? Send your question to AskUs@icmarc.org. We will draft articles based on broad topics. If you have a specific question about your account, please log in to your account at www.icmarc.org/login and use a contact option for Investor Services.

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