• For most Americans, planning for retirement involves creating an individual retirement account, or IRA. These accounts allow individuals to invest money while receiving certain tax benefits that depend on the type of IRA account that is set up. For someone who inherits an IRA, the Internal Revenue Service has specific rules that outline how the beneficiary can deal with the IRA.
  
  

Spouses

• If a widow or widower inherits an IRA from a deceased spouse, she has more options than other beneficiaries. Spouses may choose to take over the IRA as their own, in which case they become the primary owner. To do this, the spouse must be the sole beneficiary of the IRA and have unlimited rights to make withdraws. Spouses can also roll over the inherited IRA into their own personal IRA or retirement plan. The advantage of these two options is that the spouse can delay paying taxes on the money in the IRA until distributions begin from their own retirement account. If a spouse chooses not to roll over the IRA or take it over as their own, spouses may treat themselves as the beneficiaries only. In this case the spouse will receive distributions from the IRA but won't be able to make further contributions.
  
  

Non-Spouses

• Anyone who inherits an IRA from someone other than her spouse must treat herself as the beneficiary of the IRA. This means that the inheritor cannot roll the IRA over into her own account or take over the IRA as her own. Recipients can make what's called a trustee-to-trustee transfer though, which means that the IRA remains in the name of the deceased person, but money transfers can be made into it.
  
  

Withdrawals

• Regardless of a person's relationship to the deceased, the rules for withdrawing funds remain the same. With traditional IRAs, beneficiaries pay taxes whenever they withdraw money from the account. According to the IRS, beneficiaries can claim a tax deduction for the estate tax from the IRA distributions that would have gone to the deceased. However, once payments from a deceased's IRA start to go to the beneficiary, any distributions from the IRA must be counted towards the beneficiary's income; the IRS will then assess taxes accordingly.