Americans hold a staggering amount of wealth in individual retirement accounts ("IRAs").
That means that many people who have IRAs will eventually pass them on to their beneficiaries.
While that can be great news for those who inherit the accounts, it can also turn to bad news if the beneficiaries make the wrong decisions about what to do with those accounts.
Recently, Forbes discussed what some possibilities are for beneficiaries in "What To Do If You Inherit an IRA."
The single most important thing to keep in mind is that an Inherited IRA can be the source of lifetime payments or it can be a source of a very large and immediate income tax bill.
If you are smart, then you will want it to be the former, unless you absolutely need a large sum of money right away.
The general rule of thumb is that you should never take more out of an Inherited IRA than you are absolutely required to take by law. It is recommended that you take no more than the required minimum distributions. Exactly how much that is will depend on several factors and a complex set of rules.
That is why you should never make a decision about what to do with an Inherited IRA without seeking the advice of an experienced estate planning attorney or accountant.
Reference: Forbes (July 10, 2017) "What To Do If You Inherit an IRA."