Inherited IRA That Owns an LLC: What the Beneficiary Has to Do

By Easy IRA Solutions · Reviewed by Richard Amburn, founder · Last reviewed October 1, 2026

When someone dies owning an IRA that owns an LLC, the beneficiary cannot simply take over the LLC and start managing it.

There is an order to getting control of everything again.

In most cases:

Notify the IRA custodian.
Complete the inherited IRA paperwork.
Find out who has authority to manage the LLC.
Get access to the LLC bank account.
Update the LLC and custodian records.
Check whether any IRA withdrawals are required.
Decide whether to keep the LLC or close it.

The exact process depends on the custodian, the operating agreement, and who inherited the IRA.

What to do first

Week one: Notify the custodian, gather the death certificate and IRA and LLC documents, and check the operating agreement for a successor manager.

First month: Complete the inherited IRA paperwork, establish who can manage the LLC, restore bank access, and take control of bills and payments.

By year end: Check for any year-of-death RMD, determine the beneficiary's future withdrawal rules, and complete any LLC valuation the custodian requires.

If the owner died late in the year, deal with the RMD question right away.

Step 1: Call the IRA custodian

Start with the company shown on the IRA statements.

Tell them the account owner died and ask for:

Their beneficiary claim forms
Their document checklist
Their death certificate requirements
Their process for an IRA that owns an LLC
When they will begin accepting instructions from the beneficiary

Every custodian handles the paperwork a little differently.

Do not start moving LLC money or changing ownership records until you know what the custodian requires.

Step 2: Set up the inherited IRA

What happens next depends heavily on whether the beneficiary is the surviving spouse.

A surviving spouse usually has more options. Depending on the situation, the spouse may keep the account as an inherited IRA or treat it as his or her own IRA.

A non-spouse beneficiary generally cannot move an inherited IRA into a personal IRA.

If the account is transferred to another custodian, it normally needs to remain properly titled as an inherited IRA.

If there are several beneficiaries, ask the custodian whether separate inherited IRAs should be established and what deadlines apply.

Step 3: Find out who can manage the LLC

This is where many IRA LLC estates get stuck.

The person who died may have been both the IRA owner and the manager of the LLC.

Start with the operating agreement. (Why nobody can sign for the LLC right after a death is explained in What happens to an IRA LLC when the owner dies.)

If a successor manager is named

Follow the procedure in the agreement.

The successor may need to sign an acceptance and provide a death certificate or other paperwork.

If no successor is named

A new manager needs to be appointed according to the operating agreement.

The beneficiary does not personally own the LLC. The IRA owns it.

That means the manager appointment needs to follow both the operating agreement and the custodian's requirements.

Put the appointment in writing.

If the agreement is not clear about who has authority to appoint the new manager, have an attorney review it before anyone signs for the LLC.

Step 4: Get control of the LLC bank account

Once manager authority is established, contact the bank.

The bank may ask for:

A death certificate
The operating agreement
The successor manager provision or manager appointment
Identification
Updated LLC information

Being the IRA beneficiary does not automatically give you access to the LLC bank account.

Once the bank accepts the new signer, review:

Rent deposits
Note payments
Mortgage payments
Insurance
Property taxes
Utilities
Automatic withdrawals and deposits

Keep LLC money separate from personal money.

Step 5: Update the records

Custodian

Give the custodian whatever LLC documents and valuation information it requires.

LLC

Update the manager information and any other records required by the operating agreement.

IRS

If the LLC's responsible party changes, Form 8822-B generally needs to be filed within 60 days.

State

Update manager or company information with the state when required.

Bank, insurance, and property records

Update contact and signer information where needed.

The LLC will often continue using its existing EIN. If the ownership structure or tax classification changes, check with the CPA before assuming nothing else needs to be done.

Step 6: Check the IRA withdrawal rules

Inherited IRA distribution rules can get complicated quickly.

There are two main questions.

First, did the person who died have an RMD that still needed to be taken for the year of death?

If so, the remaining amount generally still needs to come out by December 31 of the year of death.

If that deadline is missed, the IRS provides an automatic waiver of the excise tax if the missed RMD is taken within the allowed correction period.

Second, what rules apply after that?

That depends on:

Whether the beneficiary is a spouse
Whether the beneficiary qualifies for one of the special beneficiary exceptions
Whether the IRA owner had reached the required beginning date
Whether the beneficiary is a person, trust, or estate

Many non-spouse beneficiaries fall under the 10-year rule.

That generally means the inherited IRA has to be emptied by December 31 of the tenth year following the owner's death.

It does not mean every beneficiary follows the same withdrawal schedule during those ten years.

Have the custodian or CPA determine which rule applies.

Step 7: Decide what to do with the LLC

There are three common choices.

Keep the LLC

The inherited IRA continues owning the LLC and the new manager continues running it.

This may make sense if the LLC owns rental property, notes, or other investments the beneficiary wants to keep.

Move the investments out of the LLC

Some custodians will hold the underlying assets directly inside the IRA.

For example, the LLC might deed real estate or assign a note directly to the custodian for the inherited IRA.

If the custodian will accept the assets directly, the LLC may no longer be needed.

Check with the custodian before transferring anything.

Close the LLC

The LLC can sell or transfer its assets, pay its bills, send the remaining IRA-owned assets or cash through the custodian, close the bank account, and complete the required state and tax filings.

Do not simply distribute LLC money or property directly to the beneficiary.

If an asset is being distributed from the IRA, the custodian should be involved in processing and reporting the distribution.

Documents to gather

You will usually want:

Certified death certificate
Beneficiary designation
Recent IRA statements
LLC operating agreement and amendments
LLC formation documents
EIN letter
Bank statements
Deeds and closing documents
Promissory notes and loan documents
Leases and rent records
Insurance policies
Property tax and mortgage information
Bookkeeping records
Recent LLC valuations
LLC tax returns, if any
Trust or estate documents, if applicable

Also make a contact list for the custodian, bank, CPA, attorney, property manager, tenants, and anyone making payments to the LLC.

Mistakes to avoid

An inherited IRA is still an IRA.

The prohibited transaction rules do not disappear because the original owner died.

Be careful about:

Personally using property owned by the IRA LLC
Letting prohibited family members use IRA property
Selling or renting IRA property to yourself or prohibited family members
Borrowing money from the IRA or LLC
Personally guaranteeing LLC debt
Mixing LLC money with personal money
Paying yourself from the LLC for managing or providing services to IRA-owned assets
Doing work on IRA property that could create a prohibited transaction
Moving a non-spouse inherited IRA into your own IRA

A prohibited transaction can create serious tax consequences and, in some cases, cause the IRA to lose its IRA status.

When in doubt, ask before doing the transaction. Fixing one afterward is much harder than avoiding it in the first place.

The short version

If you inherit an IRA that owns an LLC, start with the IRA custodian.

Get the inherited IRA established. Find out who has authority to manage the LLC. Then get the bank account and LLC records updated.

After that, determine the IRA withdrawal requirements and decide whether keeping the LLC still makes sense.

Most importantly, keep the IRA and LLC money separate from your personal money while everything is being sorted out.

Written by Easy IRA Solutions and reviewed by Richard Amburn, founder, who has set up and supported self-managed IRA LLCs since 2012.

If you have lost someone who owned an IRA LLC, call (512) 360-8196. We can tell you what the custodian will typically ask for and help you work through the first steps, whether or not we originally set up the account.

General information only. This is not tax or legal advice. Custodian procedures, IRA rules, state law, and the LLC operating agreement can change the exact process.