Inheriting an IRA From a Parent or Other Person


	Investment Products > Retirement Accounts >

Inheriting an IRA or a Retirement Plan from a Non-Spouse

If you are inheriting an IRA (includes Traditional, Roth, Rollover, SIMPLE, and Inherited IRAs) from a parent or someone other than your spouse, you have the following options:

1.	Transfer inherited assets to a Fidelity Inherited IRA and begin taking minimum required distributions by December 31 of the year following the IRA owner's death

2.	Take a cash distribution, includable in gross income, and receive a check for the full IRA amount

3.	Disclaim all or part of your assets within nine months of the IRA owner's death so they pass to the next eligible beneficiaries

The type of Retirement Plan assets you are inheriting from a parent or non-spouse will dictate your options:

If inheriting from a Fidelity Keogh Profit Sharing or Money Purchase Plan; or Self-Employed 401(k):

1.	Transfer Retirement Plan assets to a Fidelity Inherited Retirement Plan Account. Then directly roll over assets into a Fidelity Inherited IRA. This option allows you to begin taking minimum required distributions by December 31 of the year following the Retirement Plan Account owner's death. This is a new option available under the Pension Protection Act of 2006.

2.	Take a cash distribution, includable in gross income, and receive a check for the full retirement plan amount.

3.	Transfer Retirement Plan assets to a Fidelity Inherited Retirement Plan Account and leave the assets in the plan. Then take distributions according to the plan document and IRS rules.

4.	Disclaim all or part of your assets within nine months of the Retirement Plan owner's death so they pass to the next eligible beneficiaries.


If inheriting a workplace savings account such as a 401(k) or 403(b):

1.	Transfer Retirement Plan assets to an Inherited Retirement Plan Account. Then directly roll over assets into a Fidelity Inherited IRA. This option allows you to begin taking minimum required distributions by December 31 of the year following the retirement plan owner's death. Note that the Plan document must allow for a non-spouse beneficiary to roll over into an Inherited IRA as a distribution option.

2.	Take a cash distribution, includable in gross income, and receive a check for the full retirement plan amount.

3.	Disclaim all or part of your assets within nine months of the Retirement Plan owner's death so they pass to the next eligible beneficiaries.

Transfer Your Inherited IRA Assets to a Fidelity Inherited IRA

If you choose a trustee-to-trustee transfer of your inherited IRA assets into a Fidelity Inherited IRA then you'll control both how your inherited assets are invested and to whom they pass upon your death. Your minimum required distributions (MRDs) will also generally be based on your own life expectancy. See Calculating Minimum Required Distributions for more information and examples.


•		If you're sharing inherited IRA assets with other beneficiaries, you should set up your own Inherited IRA for your portion of the Inherited IRA assets by December 31 of the year following the IRA owner's date of death. See your tax or legal advisor with regard to your situation.

		Any beneficiaries who do not separate their inherited IRA assets by the cut-off date may be required to base their MRDs on the age of the oldest beneficiary on the account. In some instances, this calculation can accelerate the required distributions from your account.

•		Generally, the deadline for beginning minimum required distributions (MRDs) from an Inherited IRA is December 31 of the year following the IRA owner's death.

Top

Take a Cash Distribution for the Full Inherited IRA Amount

This option gives you immediate access to cash.

Your distribution is includable in gross income and will be subject to ordinary state and federal income taxes. An inherited IRA account is not eligible for rollover into another IRA or employee sponsored retirement plan.

Top

Disclaim All or Part of Your IRA or Retirement Plan Inheritance

If, after consulting with your attorney and tax advisor, you find that you will not need all or most of your inherited assets during your lifetime, you may want to disclaim—or refuse to inherit all or part—of your assets.

Your disclaimed inheritance would then be passed on to the next eligible beneficiaries. Any required distributions would then be based on the other beneficiary's age, rather than your own. If the other beneficiaries are younger than you, you would, in effect, be stretching out the potential for tax deferred growth on these assets.

Tax rules require you to disclaim assets within nine months of the IRA/Retirement Plan account owner's death. Be sure to consult with a tax or legal advisor concerning this option. A disclaimer is an irrevocable decision to give up your right to inherit the IRA/Retirement Plan assets.

Top

Transfer Your Inherited Fidelity Retirement Plan Assets to a Fidelity Inherited IRA

Take advantage of new legislation passed to benefit non-spouse beneficiaries.

If you choose to transfer your inherited Retirement Plan assets into a Fidelity Inherited Retirement Plan Account and then directly roll over those assets into a Fidelity Inherited IRA, you'll control how your inherited assets are invested and to whom they pass upon your death. Also, important, your minimum required distributions (MRDs) will also generally be based on your own life expectancy.

Top



Take a Cash Distribution for the Full Inherited Retirement Plan Account Balance

This option gives you immediate access to cash.

Your distribution is includable in gross income and will be subject to ordinary state and federal income taxes. An inherited retirement plan account is not eligible for rollover into a traditional IRA or employer sponsored retirement plan.

Top

Inherit Fidelity Retirement Plan Assets and Leave the Assets in the Plan

If you choose to just transfer Retirement Plan assets to an Inherited Retirement Plan Account and leave the assets in the plan, you generally must take MRDs based on the plan's distribution options available to non-spouse beneficiaries.

If the decedent was 70 ½ or older at the time of death, any Minimum Required Distribution (MRD) amounts due prior to or during the year of the direct rollover cannot be rolled over.

If the deceased Retirement Plan Account owner was over age 70 ½ and still owed a Minimum Required Distribution (MRD) for the year he or she died, you must generally withdraw the appropriate amount by December 31 of the year the Retirement Plan Account owner died. The MRD amount is distributed to you as beneficiary in the year of death must be based on the Retirement Plan Account owner’s MRD schedule but is distributed under your tax ID number.

Top

1 If no beneficiaries are named on a Fidelity Inherited IRA or survive the account owner, the Inherited IRA owner's estate is the beneficiary.

The information provided by Fidelity Investments is general in nature and should not be considered legal or tax advice. Fidelity does not provide legal or tax advice. Consult with a legal or tax professional regarding your unique tax situations.


	Fidelity IRA custodial agreements specify that when either a beneficiary is not named or no named beneficiary survives the account owner, the assets first go to the IRA owner's surviving spouse, then to the IRA owner's estate if there is no surviving spouse.¹

	Remember to update the beneficiaries (requires login) for your IRA or your Inherited IRA Beneficiary Distribution Account.


		Next Steps
		Call 800-544-0003, 8:00 a.m. - 6:00 p.m., ET to report the death of a Fidelity customer and discuss your situation with a Fidelity Inheritor Specialist.

		Get required forms online.


	Important: Check with the Plan Administrator of the Retirement Plan to determine if the plan document allows for the rollover of assets inherited by a non-spouse beneficiary to an Inherited IRA.