How to Transfer an Inherited IRA | Step-By-Step

An inherited IRA is a retirement account passed to a beneficiary after the original owner’s death. To transfer an inherited IRA, beneficiaries must open a properly titled inherited IRA account, submit transfer paperwork and required documents, and follow IRS distribution rules such as the SECURE Act’s 10-year withdrawal requirement. Most inherited IRA transfers are completed within 1–2 weeks once all documentation is received. At iTrustCapital, beneficiaries can also transfer inherited IRAs to invest in cryptocurrencies and physical gold and silver within a tax-advantaged account.*

What Is an Inherited IRA?

An inherited IRA, also known as a beneficiary IRA, is a retirement account that is opened when someone inherits an IRA or employer-sponsored retirement plan after the original owner's death. The inherited IRA maintains its tax-advantaged status, but the rules for distributions differ significantly from regular IRAs.

Inherited IRAs can come from various account types, including:

Traditional IRAs
Roth IRAs
SEP IRAs
SIMPLE IRAs
401(k) plans and other employer-sponsored accounts

Inherited IRA vs. Regular IRA: Key Differences

Understanding the differences between inherited IRAs and regular IRAs is essential for proper account management:

Feature	Regular IRA	Inherited IRA
Contributions	Can make annual contributions	No new contributions allowed
RMD Rules	Begin at age 73 for Traditional IRAs	Subject to 10-year rule or life expectancy distributions
Early Withdrawal Penalty	10% penalty before age 59½	No 10% early withdrawal penalty
Account Titling	In your name only	Must include deceased owner's name
Rollover Options	Can roll into other retirement accounts	Limited rollover options (spouse beneficiaries have more flexibility)

The 10-Year Rule for Inherited IRAs

Under the SECURE Act of 2019, most non-spouse beneficiaries who inherit an IRA from someone who passed away in 2020 or later must withdraw the entire account balance within 10 years of the original owner's death. This is known as the 10-year rule.

Exceptions to the 10-year rule include:

Surviving spouses
Minor children of the deceased (until they reach the age of majority)
Individuals who are disabled or chronically ill
Beneficiaries who are not more than 10 years younger than the deceased

These "eligible designated beneficiaries" may take distributions based on their life expectancy instead of the 10-year rule.

Spouse vs. Non-Spouse Beneficiary Rules

Spouse Beneficiaries

Surviving spouses have the most flexibility when inheriting an IRA:

Treat as their own: Roll the inherited IRA into their own IRA and treat it as if it were always theirs
Remain as beneficiary: Keep the account as an inherited IRA and take distributions based on their life expectancy
Lump-sum distribution: Withdraw the entire balance (taxes will apply for Traditional IRAs)

Non-Spouse Beneficiaries

Non-spouse beneficiaries have more limited options:

Must keep the account titled as an inherited IRA
Generally subject to the 10-year distribution rule
Cannot roll the funds into their own IRA
No 10% early withdrawal penalty applies

How to Transfer an Inherited IRA: Step-by-Step

Follow these steps to successfully transfer an inherited IRA to a new custodian:

Open an Inherited IRA Account

Open a new inherited IRA account under ‘Additional Account Options.’

Complete the Transfer

Under ‘Funding Method,’ select IRA Transfer. You'll need to provide:

Transfer type
Transferring custodian name
Transferring account type
Transferring account number

Tax Considerations for Inherited IRAs

The tax treatment of inherited IRA distributions depends on the type of IRA inherited:

Inherited Traditional IRA: Distributions are taxed as ordinary income in the year they are withdrawn.

Inherited Roth IRA: Distributions are tax-free if the original owner held the account for at least five years. The 10-year rule still applies for non-spouse beneficiaries, but withdrawals are not taxed.

Transfer an Inherited IRA to iTrustCapital

If you've inherited an IRA and want to explore alternative investment options like cryptocurrency or precious metals, iTrustCapital can help. Our platform allows beneficiaries to transfer inherited IRAs and invest in crypto and physical gold and silver within a tax-advantaged retirement account.

The transfer process at iTrustCapital typically takes 1-2 weeks. Once your inherited IRA account is established, our team will email you funding instructions and guide you through the required paperwork.

Want to learn more about opening an account? Click here to get started.

*Some taxes may apply.

Frequently Asked Questions

What is the 10-year rule for inherited IRAs?

The 10-year rule requires most non-spouse beneficiaries to fully withdraw the balance of an inherited IRA within 10 years of the original account owner’s death. This rule was introduced under the SECURE Act and generally applies to IRAs inherited from individuals who passed away in 2020 or later. While beneficiaries are not always required to take equal annual withdrawals, the account must be emptied by the end of the 10th year to avoid IRS penalties.

Can I transfer an inherited IRA to another custodian?

Yes, inherited IRAs can typically be transferred to another custodian through a direct trustee-to-trustee transfer. The account must remain titled as an inherited IRA, and non-spouse beneficiaries generally cannot combine those funds with their own retirement accounts. Many beneficiaries choose to transfer inherited IRAs to access different investment options, lower fees, or enhanced account features. At iTrustCapital, beneficiaries can transfer inherited IRAs to gain exposure to digital assets and precious metals within a secure retirement account platform.

Do I have to pay taxes on an inherited IRA?

Tax treatment depends on the type of IRA inherited. Distributions from inherited Traditional IRAs are generally taxed as ordinary income, while qualified distributions from inherited Roth IRAs are typically tax-free if the original owner satisfied the five-year holding requirement. Beneficiaries should carefully plan withdrawals to understand how distributions could impact their tax situation. iTrustCapital allows inherited IRA beneficiaries to maintain the account’s tax-advantaged status while investing in alternative assets like cryptocurrency and precious metals.

Can I contribute to an inherited IRA?

No, beneficiaries cannot make new contributions to an inherited IRA. The account is designed only to hold the assets inherited from the original owner, along with any investment growth that occurs over time. However, beneficiaries can still manage and reallocate investments within the inherited IRA depending on the custodian’s available offerings. With iTrustCapital, inherited IRA holders can diversify into crypto and physical gold and silver without making additional account contributions.

What happens if I miss the 10-year deadline for an inherited IRA?

If the inherited IRA is not fully distributed by the end of the required 10-year period, the remaining balance may be subject to IRS penalties. Current IRS guidance may impose an excise tax of up to 25% on amounts that should have been withdrawn but were not distributed on time. Proper distribution planning is important to help beneficiaries avoid unnecessary taxes and penalties.

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DISCLAIMER

This article is for informational purposes only and is not intended to constitute investment advice in any way or constitute an offer to buy or sell any cryptocurrency, digital asset or securityor to participate in any investment strategy.

iTrustCapital is a fintech software platform for alternative assets. iTrustCapital is not an exchange, funding portal, custodian, trust company, licensed broker, dealer, broker-dealer, investment advisor, investment manager, or adviser in the United States or elsewhere. iTrustCapital is not affiliated with and does not endorse any particular digital asset, precious metal or investment strategy.

Investing in any digital asset or cryptocurrency (including meme coins) carries significant risks due to their speculative and highly volatile naturePast performance is not an indication of future results. No investment is completely risk-free, and every investment carries the potential for losing some or all of the principal amount invested. Cryptocurrency is not legal tender backed by the United States government, nor is it subject to Federal Deposit Insurance Corporation (“FDIC”) insurance or protections. Digital asset (Cryptocurrency) deposits held with institutional storage providers are never FDIC insured and may lose value. Clients do not receive a choice of custody partner.

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