An Inherited IRA allows a beneficiary to maintain tax benefits while withdrawing money over their lifetime. For a Roth IRA, it allows growth to continue tax-free. For a Traditional IRA, it avoids taxes on lump sums while allowing tax-deferred growth and penalty-free withdrawals. Even if the original owner did not meet the 5-year rule, an Inherited Roth IRA allows qualifying tax-free withdrawals after that rule is met. Spouses can also avoid penalties on withdrawals by using an Inherited IRA instead of rolling over to their own IRA.