Beneficiaries who inherit an IRA from someone other than a spouse must transfer the money to an inherited IRA and then take distributions. The type of distributions available to the beneficiary depend on the age of the original account holder at the time of death, according to Charles Schwab.
If the original account holder was under age 70 1/2 at the time of death, the beneficiaries have three distribution options, Charles Schwab notes. They can take the entire account value as a lump-sum distribution, they can spread the distributions over their expected lifetime, or they can schedule the distributions over a five-year period. If the original account holder was older than 70 1/2 at the time of death, the beneficiary must choose one of the first two distribution options. Beneficiaries don’t owe taxes on inherited Roth IRAs, although they must pay taxes on distributions from inherited traditional IRAs.