Inherited IRAs

Have you inherited a retirement account? Transfer those assets to an IRA.

Making financial decisions after losing someone you care about can make a difficult time even harder. We understand and we're here to help.



Inherited IRAs at a glance

Pursue the potential for tax-deferred growth while avoiding the impact of immediate income taxes by opening a Dodge & Cox Funds Inherited Individual Retirement Account (IRA). The Internal Revenue Service (IRS) has various rules for inherited IRAs, depending on whether you are a beneficiary of your spouse or someone other than your spouse. Since these rules are complicated, we recommend speaking with a tax advisor to fully understand your options and requirements.

Overview

You can transfer an IRA or employee-sponsored retirement account you inherit from a deceased person into an inherited IRA, rather than taking a lump-sum distribution.

Tax benefits

An inherited IRA enables you to take advantage of potential growth, while deferring your tax obligation. Also, if you inherited a Roth IRA and, at least five full tax years have elapsed since the Roth IRA owner first established a Roth IRA, you can make tax-free withdrawals.

Contribution limits

As a beneficiary, you can’t make additional contributions.

Withdrawals

Generally, non-spousal beneficiaries (with certain exceptions, such as for minor children and beneficiaries who aren't more than 10 years younger than the original owner) must withdraw all funds from an inherited IRA within 10 years of the original owner's death. Different rules may apply to certain beneficiaries or if the original account owner died before January 1, 2020. For more guidance, see IRA Withdrawals or consult your tax advisor. 

Required Minimum Distributions

The rules for if/when you must begin taking Required Minimum Distributions (RMD) and/or distribute all the account assets depend on your beneficiary classification and the date of death of the original IRA owner. You must take an RMD for the year of the IRA owner's death if the owner had an RMD obligation that wasn't satisfied.

Dodge & Cox Funds account fees

You can expect to incur the typical Fund expenses and fees that are reflected in each Fund’s expense ratio. There are no additional account maintenance or transaction fees when you invest directly with Dodge & Cox.



Some key things to know

Inherited IRA eligibility

If you inherit the assets of an IRA (including Traditional, Rollover, SEP, SIMPLE and Roth IRAs) or an eligible employer-sponsored retirement plan, you’re considered a "beneficiary" and you’re generally eligible to open an inherited IRA to receive the assets from the distribution of that prior account. The rules governing inherited IRAs can be complicated, and we recommend speaking with a tax advisor to fully understand your options and requirements.

Inheriting from a spouse

If you inherit the account from your spouse, you have more flexibility than a non-spouse beneficiary. You can transfer or roll over your inherited proceeds into your own IRA and treat these assets as if they were your own (if you’re the sole beneficiary), or you can roll all or part into an Inherited IRA. For IRAs, the registration type of both IRAs must be the same (Traditional to Traditional or Roth to Roth).  

 

Keep in mind that if the original owner was taking Required Minimum Distributions ("RMDs") from the IRA, then the RMD due for the year of death must still be taken.

Inheriting from someone other than a spouse

If you inherit an IRA from someone other than a spouse, you have fewer options. You must open an inherited IRA to receive the proceeds of the distribution, and you can’t treat the IRA as your own. This means you can’t contribute to the inherited IRA or roll over the assets into an IRA in your name. Non-spouse beneficiaries generally are required to receive distribution of the assets of the inherited IRA within 10 years of the original owner's date of death, with certain exceptions for beneficiaries no more than 10 years younger than the original owner, minor children of the original owner, and those who are chronically ill or disabled. The rules for non-spouse beneficiaries are complex and have recently changed. Different rules apply if the original owner died before January 1, 2020. We recommend speaking with a tax advisor to understand how those rules might apply to your situation.

Take the next step

Making financial decisions after losing someone you care about can make a difficult time even harder. We understand and we're here to help you with the account opening process.

FAQs about Inherited IRAs

The first step is to open a Dodge & Cox Funds Inherited IRA into which you can transfer the assets from the retirement account you inherited. To do that, you’ll need to download our Inherited IRA application and have the following information on hand:

  • Your contact information, including Social Security number.
  • The name and details of the account you're inheriting, including the assets you may want to transfer or roll over. If the assets you’re inheriting are held in an account with a different record keeper or custodian, review and complete the Dodge & Cox Funds IRA Transfer of Assets Form. If the assets are held in an account with the Dodge & Cox Funds, review and complete the Dodge & Cox Funds IRA Inheritance Form to transfer the account.
  • Decedent’s information, including a Notarized Affidavit of Domicile, a copy of the death certificate, and letters testamentary (probate court documents that enforce the terms of the deceased person's will).

No, only spousal beneficiaries can treat inherited IRA assets as their own.

You can receive a distribution from an inherited IRA at any time after the account is re-registered as an inherited IRA for your benefit. However, remember that inherited IRAs are subject to Required Minimum Distribution rules. 

We’re here to help

Call

800-621-3979

Monday – Friday,

8 a.m. – 7:30 p.m., Eastern time.

Mail

Regular Mail

Dodge & Cox Funds

P.O. Box 219502

Kansas City, MO 64121-9502

 

Express Mail

Dodge & Cox Funds

430 W Seventh Street, Ste 219502

Kansas City, MO 64105-1407

Disclosures

Tax laws and regulations are complex and subject to change, which can materially impact investment results. Dodge & Cox cannot guarantee that the information herein is accurate, complete, or timely and makes no warranties with respect to such information, including your use of, or any tax position taken in reliance on, such information. Only Dodge & Cox Funds are available for purchase in a Dodge & Cox Fund IRA Account. Investment options available through an employer's retirement plan or other IRA providers and any associated fees and expenses will differ. Consult with a tax or legal advisor before making any investment decision.