Life essentials
Inheriting a retirement account
What to do if someone has left you a retirement account.
What to do if someone has left you a retirement account.
Losing a loved one is difficult. No amount of money can compensate for the loss of a spouse, family member or friend. However, even during what may be a difficult time, there are important—and potentially time-sensitive—decisions to make.
If someone has named you as a beneficiary of their retirement account, like a 403(b), 401(k), or IRA, you’re entitled to some or all of the savings in the account. If it’s a TIAA account, we can help as you transfer the account to your name, determine what rules apply to you, and decide what to do with the money.
While we can guide you through the process, we don’t provide legal or tax advice. If you think you’ll need advice, we recommend you work with a lawyer, tax advisor or other professional.
Transfer money to your name
The first thing you’ll need to do is transfer the assets into your name. You can do this online, by logging into the deceased’s account. If you don’t have their username and password or want help, call our Beneficiary Services team.
There are laws dictating how long funds can remain “unclaimed” before they are considered abandoned property and sent (escheated) to the government. These laws vary by state, but to avoid this, be sure to transfer ownership as quickly as possible.
To discuss your specific needs, please call the TIAA Beneficiary Services team at 888-380-6428, weekdays, 8 a.m.–7 p.m. E.T.
Follow applicable rules
Most retirement accounts have rules that specify when you need to start withdrawing money—these withdrawals are called “required minimum distributions” (RMDs), and they apply to inherited retirement accounts as well. The general rule is that you, the beneficiary, need to receive the entire inherited account within 10 years following the account holder's death. “Eligible designated beneficiaries” (EDBs), such as spouses, disabled or chronically ill individuals, and minor children use different sets of rules. A TIAA consultant can help you understand the rules that apply to your situation.
Understand tax implications
Withdrawal laws exist because many retirement accounts are “tax-deferred,” meaning the original account owner saved pre-tax money (money that hadn’t been taxed yet), and planned to pay taxes when they took money out. When you withdraw money from an inherited retirement account, you’ll need to pay these taxes. Consider consulting with a tax or legal advisor to understand the tax implications of your options.
Review your options
As a beneficiary, you have several options for managing your inheritance. If you don’t need additional income right now, you can continue saving and investing. Here are some of your options.
- Leave the money as is. Keep your money in the existing plan and automatically receive RMDs based on IRS laws. You can choose to keep the RMDs, or reinvest through a brokerage account (investing on your own) or managed account (professionals invest on your behalf).
- Roll over assets into an inherited IRA. Another way to keep the money invested is to move the funds into an inherited IRA. An IRA (short for “individual retirement account”) provides a way to invest for retirement and often comes with tax advantages. The spouse of the deceased has the additional option of rolling over the funds into a traditional or Roth IRA.
If you need to receive payments right away, perhaps to supplement your income or pay for a particular expense—such as outstanding debt, funeral expenses, or a child’s tuition—you can focus on the options that will provide income now.
- Receive lifetime income. Some beneficiaries are eligible to receive lifetime income, which are regular checks that last for your entire life, or for a set period. In this option you would move the funds to an annuity.
- Take a cash withdrawal. In this option, you can receive cash immediately. Some penalties may apply.
Each choice comes with advantages and considerations. TIAA consultants can help you understand your options. While we’ll provide you with as much help as we can, every situation is unique. We recommend consulting your professional tax or legal advisor for advice and additional information specific to your situation.
We're here to help
Call the TIAA Beneficiary Services team at 888-380-6428, weekdays, 8 a.m.–7 p.m. (ET).
Financial consultants provide advice and education using an advice methodology from an independent third-party.
This material is for informational or educational purposes only and is not fiduciary investment advice, or a securities, investment strategy, or insurance product recommendation. This material does not consider an individual’s own objectives or circumstances which should be the basis of any investment decision.