Part 3/5:
One of the most compelling features of IRAs is how they treat spousal beneficiaries differently than non-spousal beneficiaries. If a spouse inherits an IRA, they enjoy certain privileges, specifically the ability to merge the inherited funds into their own account. This means they can manage the funds just like they would their personal IRA contributions.
Conversely, non-spousal beneficiaries are subject to different rules. In this case, the inherited funds are placed into what is known as an "inherited IRA". This type of account comes with its own set of regulations regarding withdrawals and how long the funds may remain in the account. Generally, the rules can be quite intricate, which underscores the importance of understanding how inherited IRAs function.