Non-spouse Beneficiary

A Non-spouse Beneficiary in the context of the Individual Retirement Account (IRA) industry refers to an individual who inherits an IRA or other retirement account from the original account owner but is not the spouse of the deceased account owner. This could be a family member, friend, or any other person designated by the account owner as the beneficiary.

When a non-spouse beneficiary inherits an IRA, they must follow specific rules and guidelines set by the Internal Revenue Service (IRS) regarding required minimum distributions (RMDs), tax implications, and how the inherited assets can be managed. Non-spouse beneficiaries may choose to either liquidate the account within a specified time frame, typically five years or stretch the distributions over their own life expectancy, which may result in a reduced tax burden. These options and specific regulations may vary depending on the type of IRA (Traditional or Roth) and the age of the original account owner at the time of death.