3 Things You Must Know About Inheriting an IRA

Inherited IRA RulesWith the exception of financial experts, deciphering the rules of individual retirement accounts can often leave a person confused and frustrated.

Actually, scratch that.

Even financial experts can get stumped on the inherited IRA rules.

While the gist of most IRAs is relatively easy to comprehend, once a person begins investigating the rules – requirements and exclusions – things tend to get a bit tricky.

This becomes even more apparent when you find yourself named as a beneficiary of an IRA from a friend or family member who has passed.

Inherited IRAs constitute some of the largest assets left in an estate.

For this reason any heirs who find themselves in a position of deciding what to do with an inherited IRA should think carefully about all the options before making their final decision.

I’ve had many clients that have been faced with this very decision.

Most are tempted to just cash it in and buy <fill in the blank> which is usually some item they just don’t flat out need.

Please don’t be this person.

Since this decision can have a huge impact on your own personal finances (in both positive and negative ways) most beneficiaries will benefit by consulting with a tax professional or financial advisor experienced in this area.
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Should You Use an Inheritance to Pay off Debt?

I recently met with some clients that were in the process of inheriting a very large chunk of money, more than they might otherwise have in their entire life, unless they were to win the lottery. I don’t believe that they buy lottery tickets, so chances of that happening are pretty small. During the meeting we spent a great deal of time discussing their current investments, what they’re invested in, etc. As the meeting went on and we began to scratch past the surface, I learned more about the clients’ situation. At this point in their life, they didn’t have a lot in savings and had not done much in the line of preparing for retirement.
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