By Jason Heath, CFP on February 20, 2026 Estimated reading time: 3 minutes

What happens when you inherit an IRA or 401(k)?

By Jason Heath, CFP on February 20, 2026 Estimated reading time: 3 minutes

Learn how inheriting a US IRA or 401(k) works for spouses and non-spouses, including taxes, withdrawal rules, and opportunities for tax deferral.

A US traditional individual retirement account (IRA) is a bit like a Canadian registered retirement savings plan (RRSP). A 401(k) is like a defined contribution (DC) pension plan. In both cases, tax-deductible contributions can be made by a retirement saver with future withdrawals generally subject to tax. 

When a spouse inherits an IRA or 401(k), they can take over the account as an inherited account or transfer the account into their own IRA or 401(k) on a tax-deferred basis. 

IRA and 401(k) accounts generally have required minimum distributions (RMDs) beginning at age 73. These are subject to US withholding tax for a Canadian resident, and Canada taxes the withdrawal with a credit for the US tax already withheld. 

A US citizen living in Canada must report their worldwide income on both a Canadian and US tax return. 

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