You Just Inherited an IRA — Now What?

A Business Owner’s Guide to Navigating Inherited IRAs and Roth IRAs with Strategy and Heart

You’ve spent your life making decisions — big ones — under pressure. You’ve made payroll when things were tight, reinvested when others would’ve walked away, and carried the weight of your business and your family on your shoulders.

But nothing prepares you for this:

You get a call. Your parent, spouse, or even a long-time mentor has passed. And in their estate? A retirement account with your name on it.

You didn’t expect it. And even if you did, you’re not sure what to do with it now.

Suddenly you’re holding someone else’s life savings. The culmination of their discipline, their choices, their faith in the future — and in you.

This isn’t just about money.

It’s about meaning. It’s about responsibility. It’s about making sure their legacy… and your financial life… are both honored, protected, and made stronger.

As a financial planner who works exclusively with business owners, I’ve seen this moment unfold many times. It’s emotional. It’s complicated. And it matters — because when you inherit a retirement account, the tax choices you make now can either create clarity or costly mistakes down the line.

Let’s walk through what to consider when you inherit a traditional or Roth IRA — and how to turn this into a moment of both healing and financial opportunity.

First, Take a Breath: The Emotional Weight of Inheritance

I’ve sat across from many entrepreneurs in this exact moment. People who are usually decisive, confident, and financially savvy. But when the inheritance comes? The sharpest minds pause.

Why?

Because this is money wrapped in memory.
The account may be titled in your name, but it still feels like theirs.

And that comes with questions:

“Am I doing this right?”
“Would they have wanted me to use it for my business? My retirement?”
“Do I keep it separate? Invest it differently? Use it for my kids?”

These aren’t just financial questions. They’re personal ones.

That’s why good planning isn’t just about the numbers. It’s about clarity. Empathy. And making sure your choices align with your values — and theirs.

What Kind of Inherited IRA Is It?

Before you make any moves, it’s crucial to understand what type of IRA you’ve inherited and your relationship to the deceased. The rules — and opportunities — vary significantly.

Are You the Spouse?

If you’ve inherited the IRA or Roth IRA from your spouse, you have the most flexibility — but also the most important decisions to make.

Here are your options:

1. Treat the IRA as Your Own

This is often the simplest and smartest move if you’re over 59½ and don’t need immediate access to the funds. You roll it into your own IRA or Roth IRA, and the account continues as if it were always yours.

Traditional IRA: RMDs begin at age 73 or 75, depending on your birth year.
Roth IRA: No RMDs in your lifetime. That’s tax-free growth with no forced withdrawals.

For many business owner spouses, this is the right move — especially if you want long-term compounding or plan to leave this money to your own children or charities.

2. Open an Inherited IRA

If you’re under 59½ and may need to tap the funds for business cash flow, a child’s education, or to pay down debt, this option gives you more flexibility. You can access the funds at any age without the 10% early withdrawal penalty.

But:
You’ll need to start taking RMDs — which can push up your taxable income. That might hurt more if you’re also selling a business, realizing capital gains, or managing other high-income years.

Real Example: A client inherited a $400,000 traditional IRA from her husband. She was 53, and her daughter had just gotten into college. We used an Inherited IRA with a 5-year plan to provide tuition support, stay in a manageable tax bracket, and still invest what she didn’t need. We even layered in a Roth conversion strategy later.

Non-Spouse Inheritors: The 10-Year Rule (and Hidden Traps)

If you inherited an IRA from a parent, sibling, or mentor — and you’re not their spouse — your choices are narrower.

Since the SECURE Act, most non-spouse beneficiaries must empty the account within 10 years.

Here’s what that means for you:

Traditional IRA: It’s All Taxable

Every dollar you withdraw counts as ordinary income. Which means timing is everything.

You could:

Take equal distributions over 10 years to stay in a stable tax bracket
Wait until Year 10 and withdraw it all (not recommended unless you’re in a zero-income year)
Withdraw more in low-income years — say, the year you sell a property at a loss or reinvest into your business

Pro Tip: Business owners often have uneven income years. Use that to your advantage. If you’re winding down, between ventures, or just sold your business, you might be in a lower bracket. That’s the perfect window to pull more without hurting your long-term tax efficiency.

Inherited Roth IRA: A 10-Year Tax-Free Growth Window

The good news? Withdrawals are tax-free if the original Roth was open for at least five years.

That gives you a 10-year compounding runway with no taxes. For many of my clients, this becomes a legacy asset they grow and then pass down to their own children — or use for charitable giving.

Don’t Miss This: Exceptions That Buy You More Time

Not everyone is bound by the 10-year rule. You may qualify for lifetime RMDs instead if you’re an “eligible designated beneficiary,” such as:

A minor child (until they turn 18 or 21)
A chronically ill or disabled individual
Someone less than 10 years younger than the deceased

If you’re in this category — or if your child is — you may be able to preserve the account longer. This is often critical when coordinating with trusts, future retirement needs, or balancing personal and business cash flows.

Business Owner? Here’s What You Should Be Thinking About

When you inherit an IRA as a business owner, you’ve got a different lens.

You’re not just asking:

“How do I take this money out?”

You’re asking:

“How do I align this with my exit plan?”
“Can this offset a big tax year?”
“Could I use this for funding a buy-sell agreement or a SEP contribution shortfall?”
“Does this reduce my need to sell equity or draw from business cash reserves?”
“Could this fund a charitable trust or future gifting strategy?”

Your business and your personal financial life are deeply intertwined. You need someone who can see both — and connect the dots.

Your Next Moves (Don’t DIY This)

Before you move a dollar, do this:

Get the Account Paperwork Right
Title it properly. Don’t roll into your own IRA unless you’re a spouse choosing to treat it as yours. Mistakes here can’t be undone.
Check the Original Account Type
Traditional or Roth? That drives everything — from taxes to timing.
Create a Distribution Plan
Spread the tax hit, coordinate with your business income, and use low-income years wisely.
See How It Affects Your Big Picture
This inheritance could help fund your buyout, cushion your retirement, or shift your tax strategy. Let’s think holistically.

This Is Where I Come In

You’ve got enough on your plate. Between managing your business and your family, the last thing you need is to fumble a one-time financial opportunity because of IRS fine print.

I help business owners navigate these exact decisions — with strategy, care, and precision.

In a single Clarity Session, we’ll:

Build a 10-year withdrawal and tax strategy
Explore how this fits into your business exit or legacy plan
Review Roth conversion or charitable giving strategies
Coordinate this with your CPA and estate attorney
Bring clarity, not confusion, to this deeply personal moment

This is one of those moments that doesn’t happen often. But when it does, it deserves your full attention — and the right guidance.

Final Thoughts: A Legacy, a Responsibility, and a Gift

An inherited IRA is more than just a financial windfall. It’s a moment.

A chance to pause. To reflect. To honor.
To turn someone else’s hard work into your next smart move.

Handled well, it can multiply impact across generations.
Handled poorly, it can create tax headaches and lost opportunity.

You don’t have to figure this out alone.

Book a Clarity Session — and let’s make sure their legacy becomes part of your future.