If you don’t need the money in your IRA in your lifetime, you can “stretch” it by passing it on to your heirs.
If the money is passed on, it doesn’t have to be taken out in a lump sum, according to an article on AARP.com. It can be stretched out over a lifetime, decreasing the tax hit.
All that must be done is to name a beneficiary such as a child or grandchild. This can apply to a regular or Roth IRA.
If you inherit an IRA, the first thing to remember is to touch nothing. If you roll it over into your IRA, it becomes immediately taxable. You must retitle the IRA with your name added to the deceased person’s name. And then you have to start taking required withdrawals, and pay the taxes on them.
You then can stretch the IRA to help your own children when the time comes.
But, the article notes, most people take the money and run. As a consequence, they often have a large tax bill.