How to Transfer From a Beneficiary IRA to My Own IRA

When the owner of an Individual Retirement Account dies, whoever is named as a beneficiary on the account inherits the contents. If the beneficiary is the owner's spouse, he can assume ownership of the account and keep depositing money into it, or he can transfer the contents into his own IRA. If the beneficiary isn't a spouse, he can't take either of those options, but he can create a new "inherited IRA" and transfer the money into it. A spouse can also exercise the inherited IRA option.

• 1

  Ask the trustee of the deceased's account to transfer the money to another IRA. You can withdraw the money and transfer it yourself, but the paperwork on a trustee-to-trustee transfer is simpler, the IRS states. If the IRA receiving the money is an inherited IRA, you have to ask the financial institution to establish it for you first. Once it's established, the trustee has to make the transfer; with an inherited IRA, the law says you can't do it yourself.

• 2

  Check back with the trustee to make sure the rollover went through. The IRS normally allows 60 days for rollovers, and it taxes the money if the transfer takes longer than that. You can apply for a waiver if the trustee makes a mistake that delays things, but it's simpler to double-check before the deadline passes.

• 3

  Check that the deceased's name is on the transfer account if it's an inherited IRA. The account should be identified, for example, as "John Doe, beneficiary of Richard Roe," according to The Motley Fool website. If it's the beneficiary's name alone, the IRS taxes the contents as if he'd simply withdrawn all the money from the beneficiary IRA and put it in his bank account.

• 4

  Report the transaction on your 1099 form if you withdrew the money before rolling it over. The report is necessary, even if you're not paying any tax on the transaction. If you used a trustee-to-trustee transfer, there's no need to report the rollover, the IRS states.

• 5

  Start taking withdrawals as required by the IRS. The IRS normally requires minimum withdrawals after an account owner reaches age 70 1/2, but the rules for calculating the minimum required withdrawal on an inherited IRA are complicated, so review them carefully.