IRS Publication 590B — Distributions from IRAs

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Traditional IRAs Reminders Types of IRAs. An IRA can be either a traditional IRA or a Roth IRA. In general, individuals may make their own contributions to their traditional IRAs or Roth IRAs. In addition, certain employers have arrangements under which the employer may contribute to IRAs of their employees. Under a SEP arrangement, an employer contributes to traditional IRAs (sometimes referred to as traditional SEP IRAs) or Roth IRAs (sometimes referred to as Roth SEP IRAs) of its employees. Individuals may separately make their own contributions to the same IRAs to which their employer contributes under a SEP arrangement. Under a SIMPLE IRA plan, an employer contributes salary reduction contributions (at the election of the employee), matching contributions and/or nonelective contributions to traditional IRAs (sometimes referred to as traditional SIMPLE IRAs) or Roth IRAs (sometimes referred to as Roth SIMPLE IRAs) of its employees. However, a SIMPLE IRA (whether a traditional SIMPLE IRA or a Roth SIMPLE IRA) is subject to certain restrictions that do not generally apply to other traditional IRAs or Roth IRAs. For example, an individual cannot make their own contributions to a SIMPLE IRA. In addition, there are various restrictions related to distributions and contributions during the initial two years of participation in the SIMPLE IRA plan.

References in this publication to traditional IRAs generally include traditional SEP IRAs but do not include traditional SIMPLE IRAs, unless otherwise stated. Likewise, references to Roth IRAs generally include Roth SEP IRAs but do not include Roth SIMPLE IRAs, unless otherwise stated.

Introduction This chapter discusses distributions from a traditional IRA. In this publication, the original IRA (sometimes called an ordinary or regular IRA) is referred to as a “traditional IRA.” For purposes of this publication, a traditional IRA is any IRA that isn’t a Roth IRA or a SIMPLE IRA. Traditional IRAs include traditional IRAs that receive employer contributions from SEP arrangements. The following are two advantages of a traditional IRA.

• You may be able to deduct some or all of your contributions to it, depending on your circumstances.

• Generally, amounts in your IRA, including earnings and gains, aren’t taxed until they are distributed. Roth IRAs are discussed in chapter 2. SIMPLE IRAs are discussed in Pub. 560.

Roth IRAs are discussed in chapter 2. SIMPLE IRAs are discussed in Pub. 560.

What if You Inherit an IRA?

If you inherit a traditional IRA, you are called a beneficiary. A beneficiary can be any person or entity the owner chooses to receive the benefits of the IRA after the owner dies. Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive. Tip: IRAs inherited from decedents who died in 2019 or earlier are subject to different rules. See Retirement Topics - Beneficiary, for more information. Inherited from spouse. If you inherit a traditional IRA from your spouse, you generally have the following two choices.

1. Treat it as your own IRA by designating yourself as the account owner; or

2. Treat it as your own by rolling it over into your IRA, or to the extent it is taxable, into a: a. Qualified employer plan, b. Qualified employee annuity plan (section 403(a) plan), c. Tax-sheltered annuity plan (section 403(b) plan), d. Deferred compensation plan of a state or local government (section 457 plan), or

3. Treat yourself as the beneficiary rather than treating the IRA as your own.

Treating it as your own. You will be considered to have chosen to treat the IRA as your own if:

• Contributions (including rollover contributions) are made to the inherited IRA, or

• You don't take the required minimum distribution for a year as a beneficiary of the IRA.

You will only be considered to have chosen to treat the IRA as your own if:

• You are the sole beneficiary of the IRA, and

• You have an unlimited right to withdraw amounts from it.

However, if you receive a distribution from your deceased spouse's IRA, you can roll that distribution over into your own IRA within the 60 -day time limit, as long as the distribution isn't a required distribution, even if you aren't the sole beneficiary of your deceased spouse's IRA. Inherited from someone other than spouse. If you inherit a traditional IRA from anyone other than your deceased spouse, you can't treat the inherited IRA as your own. This means that you can't make any contributions to the IRA. It also means you can't roll over any amounts into or out of the inherited IRA. However, you can make a trustee-to-trustee transfer as long as the IRA into which Publication 590-B (2025) Chapter 1 Traditional IRAs 5