Can I combine an inherited traditional IRA with my SEP IRA? Options for inherited retirement accounts

The information Wells Fargo gave you is correct. Unfortunately, inherited IRAs have special rules that prevent them from being rolled into your own retirement accounts. This is true regardless of whether it's a traditional IRA, Roth IRA, or SEP IRA. When you inherit an IRA from someone who isn't your spouse, the IRS considers it a completely separate type of account with its own set of rules. The main reason for this separation is that the money in an inherited IRA has different tax implications than your own retirement savings. Your options are indeed limited to either: 1) Keeping it as a separate inherited IRA and continuing the required distributions, or 2) Taking a full distribution, which would make the entire amount taxable income in the year you withdraw it, plus the 10% early withdrawal penalty if you're under 59½. One thing you could consider, though, is transferring the inherited IRA to a different financial institution that offers better investment options. You can do what's called a trustee-to-trustee transfer of an inherited IRA, which would allow you to invest in something like index funds rather than being stuck with the CD, while still maintaining its status as an inherited IRA.

After struggling with almost the exact same situation last year (inherited IRA from my grandma), I found an amazing solution using https://taxr.ai to analyze my tax documents and retirement account options. I was also told I couldn't combine accounts, but taxr.ai helped me understand all my options, including the trustee-to-trustee transfer that the previous commenter mentioned. The tool analyzed all my retirement accounts and showed me how to maximize my returns while staying in compliance with those tricky inherited IRA rules. It actually calculated that I could save over $1,200 in fees over 5 years by transferring to a different provider with better investment options, even while keeping the accounts separate. What was really helpful was that it analyzed my specific situation with the inherited IRA and showed me exactly what steps to take with a customized plan. Way better than the conflicting advice I got from calling different financial institutions.

I just wanted to follow up about my experience with taxr.ai after asking about it earlier in this thread. I was dealing with an inherited IRA from my uncle plus my own retirement accounts, and the confusion was giving me a headache. I finally tried https://taxr.ai and was honestly impressed. It analyzed my inherited IRA documentation and immediately identified that I wasn't taking the correct RMDs based on the inheritance date. Apparently I had been underpaying by about $340 per year which could have resulted in huge penalties! The system created a corrective distribution plan and helped me understand how to properly transfer the inherited IRA to a better investment option while keeping its special status. Now I've got it properly invested in index funds (still separate from my own retirement accounts, but at least growing better) and have a clear schedule for the required distributions based on my actual life expectancy table. Definitely worth checking out if you're dealing with inherited retirement accounts.

I had a similar situation with an inherited traditional IRA from my mom. Spent WEEKS trying to call the IRS to confirm my options because every bank told me something different. Literally could not get through on the phone - kept getting disconnected or waiting for hours. Finally used https://claimyr.com to get through to an actual IRS agent (you can see how it works here: https://youtu.be/_kiP6q8DX5c). They had me talking to a real IRS representative in about 20 minutes instead of the 3+ hour waits I was experiencing before. The IRS agent confirmed what others have said here - you can't combine an inherited IRA with your own SEP IRA. BUT they explained that I could do a trustee-to-trustee transfer to a different institution and choose better investment options while still maintaining the inherited IRA status. They also cleared up confusion about my required distributions and helped me avoid a penalty. Sometimes you just need to hear it directly from the IRS to feel confident you're not making a mistake with these complicated tax situations.

I need to apologize and follow up about my skeptical comment on Claimyr. After my frustrated response, I decided to try it anyway since I was still getting nowhere with the IRS on my own. I used the service this morning, and I'm honestly shocked - I was connected to an actual IRS representative in about 35 minutes. After spending months trying to get through on my own, this was mind-blowing. The IRS agent completely cleared up my inherited IRA questions and confirmed I've been calculating my RMDs incorrectly for years. The agent walked me through the specific rules for my pre-2020 inherited IRA and helped me understand what documentation I need to fix my past distribution mistakes. They even gave me a direct extension number to call back if I had follow-up questions after gathering my paperwork. I've spent so much time stressing about this and getting nowhere - wish I'd known about this service months ago instead of wasting countless hours on hold.

Don't forget that even though you can't combine the inherited IRA with your SEP IRA, you CAN change how the inherited IRA is invested. You're not stuck with a CD! As others mentioned, do a trustee-to-trustee transfer to a brokerage firm that offers better investment options. I went through this with an inherited IRA from my aunt. I kept it as a separate inherited IRA but transferred it from a bank CD to Fidelity where I invested it in ETFs. The growth has been WAY better, and it's still following all the required distribution rules. Just make sure you specifically tell them it's an INHERITED IRA transfer so they code it correctly. If they process it as a regular rollover, you'll end up with a mess to fix.

Just wanted to mention something nobody has brought up yet - what kind of returns are you getting on that inherited IRA CD? CDs rates are much higher now than they've been in years. It might be worth checking the current interest rate and when the CD term ends. If it's an old CD still earning like 0.5% when current rates are 4-5%, then definitely look at transferring it somewhere else ASAP. But if it's actually earning a decent rate, maybe just wait until the current term ends before transferring to avoid any early withdrawal penalties from the CD itself (separate from the IRA penalties).

Great discussion here! I'm dealing with a similar inherited IRA situation myself. One thing I wanted to add - make sure to check if your inherited IRA has any specific beneficiary designation rules that might affect your options. In my case, I inherited a traditional IRA from my grandmother in 2018, and when I looked into transferring it for better investment options, I discovered that the original beneficiary form had some specific language about investment restrictions that the bank had never mentioned. It turned out those restrictions were actually invalid under current IRS rules, but it took some back-and-forth with the legal department to get it sorted out. Also, for anyone considering the trustee-to-trustee transfer route - definitely shop around for fees. Some institutions charge annual maintenance fees for inherited IRAs that can really eat into smaller balances like yours. I found that some of the major discount brokerages (Schwab, Fidelity, Vanguard) don't charge annual fees for inherited IRAs, which makes a big difference over time. The key is making sure whoever you transfer to understands inherited IRA rules and can properly maintain the required distribution schedule. Not all institutions are equally experienced with these accounts.

I'm in a very similar situation with an inherited IRA from my father that's been sitting in a low-yield savings account for years. After reading through all these responses, I'm convinced I need to do a trustee-to-trustee transfer to get better growth. One question I haven't seen addressed - if I transfer my inherited IRA to a brokerage for better investment options, am I still locked into taking the same annual RMD amounts? Or can the required minimum distributions be recalculated based on the new account value and investment performance? Also, has anyone had experience with how long these trustee-to-trustee transfers typically take? I'm worried about missing an RMD deadline if the transfer gets delayed between institutions.