What is an inherited IRA?

An inherited IRA allows beneficiaries a way to keep the funds growing tax-advantaged in an IRA while taking distributions. The account titling will always refer to the deceased IRA owner, with you listed as the beneficiary. Since you aren’t the owner, you may not make contributions and cannot execute a 60-day rollover to this account. The benefit of this arrangement is that you only need to take annual required minimum distributions (RMDs) based on your life expectancy and are taxed on that amount; this is often referred to as the stretch IRA strategy.