The rules about inherited IRAs can be more complex than with other IRAs, so guidance from a tax professional is of critical importance. That said, here are some general guidelines to understand:
If you inherit a traditional IRA from your spouse and you roll over the money to your own IRA, you must begin RMDs based on your own life expectancy once you pass what is called your required beginning date (RBD). Your RBD is April 1 of the year after you reach age 73. You can delay the first RMD until your RBD, but you would then be required to take two RMDs in that year, one by April 1 and one by December 31. If you are a spouse inheriting an IRA, you can alternatively choose to treat the IRA as an inherited IRA in the same manner as a non-spouse described below.
When you inherit an IRA from anyone other than your spouse, you do not have the option to roll over the account into your own IRA, and your choices for distributing the value of the account will depend on whether you're considered an eligible designated beneficiary (EDB). An EDB is a surviving spouse, a disabled or chronically ill individual, an individual who is not more than 10 years younger than the decedent or a child of the account owner who has not yet reached age 21. Generally, for individual beneficiaries who are not EDBs, assets in an inherited IRA must be distributed within 10 years of the account owner's death unless an exception applies. This 10-year distribution rule for non-spousal beneficiaries also applies if you inherit a 401(k), and plan rules may also apply.
Distribution rules also will differ based on the date of the account owner's death and whether or not the original account owner died before or after their RBD for RMDs. Generally, if RMDs have commenced prior to the account owner's death, payments must continue each year. The rules are complex, and distributions have tax implications. You should consult your personal tax advisor regarding your specific situation before making any decisions.