By Vincent R. Birardi, CFP®, AIF®, Wealth Advisor at Halbert Hargrove featured in Kiplinger 

When you inherit an IRA, you likely have a lot of questions. Do you need to take RMDs? When? How long do you have before the account must be cleaned out?

There’s been significant buzz recently focused on the expected transfer of approximately $72 trillion (yes, trillion with a T) of personal assets in the United States over coming years from baby boomers to younger generations. While this may seem to negate the need for pre-retirees to plan for their own retirements (spoiler alert — it doesn’t), it does highlight the significant role inherited IRAs play in wealth transfers between generations.

There are two types of inherited IRAs: traditional and Roth. An inherited traditional IRA is a tax-deferred investment account that is used as the vessel to receive assets coming from another tax-deferred investment account (e.g., traditional 401(k)s and traditional IRAs).

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By comparison, an inherited Roth IRA is an after-tax investment account used to receive assets from a Roth 401(k) or Roth IRA.

To help you decide how to handle being the owner of an inherited IRA, I’ve compiled three common questions I receive from my clients and my current guidance on the matter.

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