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Is it better to inherit or assume an IRA?

If you assume the IRA, you can take penalty-free distributions anytime, but you must also take RMDs. If you inherit the IRA, there will be no penalties for distributions. But you may have to take RMDs every year (if you choose the life-expectancy distribution method instead of the ten-year method).

investor.vanguard.com - Helping you, a spouse, through the IRA inheritance process - Vanguard

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I’m the sole beneficiary inheriting a traditional, rollover, or SEP-IRA

Here are some things to consider before making a decision about whether to assume the IRA or to inherit the IRA.

General info:

Assume: The IRA is treated as your own, which means that once the transfer is complete, you’ll follow the same IRA rules you would normally. All the standard contribution and distribution rules would apply: you can contribute a maximum amount each year, and you must start taking required minimum distributions (RMDs) at age 72. Inherit: The IRA will have some unique IRS rules associated with it. These unique rules will apply to the timing of your distributions from the inherited IRA. Generally, you’ll have flexibility about when you choose to begin distributions (you can choose to start them by December 31 of the year following the decedent’s passing, or you can choose to wait until the year the decedent would have turned 72). You’ll also have some flexibility about how you take the distributions (through the life-expectancy method or the ten-year method). Visit the IRS website for more information about these methods. Remember, you can never contribute to an inherited IRA. And you can also choose to inherit the IRA, and then assume it later.

If you’re under age 59.5:

If you assume the IRA, remember that you’ll be penalized for taking distributions before you turn age 59.5. You will be able to defer distributions from the IRA until you turn 72, however. If you inherit the IRA, there will be no penalties for taking distributions. But you may have to take RMDs every year (if you choose the life-expectancy distribution method instead of the ten-year method).

If you’re between ages 59.5 and 72

If you assume the IRA, you can take penalty-free distributions anytime, or choose to wait until you’re age 72 when you have to take RMDs. If you inherit the IRA, there will be no penalties for distributions. But you may have to take RMDs every year (if you choose the life-expectancy distribution method instead of the ten-year method).

If you’re over age 72

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