Dear Carrie: I inherited a traditional individual retirement account from my father. Should I convert it to a Roth IRA? — A Reader

Dear Reader: As I'm sure you know, an inheritance can bring up conflicting emotions, placing the positive of financial gain against the sadness of losing a loved one. Complicating the situation further, certain inheritances — such as an IRA — are more difficult to sort out than others.

The first thing to understand is that IRA inheritance rules differ depending on whether the beneficiary is a spouse or a non-spouse. A spouse has almost limitless options, including treating an inherited IRA as his or her own, even to the extent of converting it to a Roth IRA.

A non-spouse beneficiary, however, has choices that are much more limited. As a non-spouse, you can take the IRA money either in a lump sum or as mandatory withdrawals over time. Unfortunately, though, a non-spouse beneficiary cannot roll over any amounts into or out of an inherited IRA, so the short answer is no, you can't convert the traditional IRA you inherited from your father into a Roth IRA.

However, you can make choices as to how you take the withdrawals, which will have some bearing on your tax situation. Let's review your choices.

If You Take the Assets as a Lump Sum

As I mentioned, a non-spouse can take the assets all at once. The upside is that you have access to all the money right away, and there's no 10 percent penalty for early withdrawals. The downside is that you'll have to pay income tax on the distribution at your ordinary income tax rate — which could be quite a sum, depending on the amount of the inheritance.

Another concern is that the distribution itself could bump you into a higher tax bracket, increasing the amount you have to pay in taxes. So a lump sum might not be the most tax-efficient way to access the assets.

If You Take Withdrawals Over Time

Taking mandatory withdrawals over time can ease your tax burden, but the process is a bit more complicated.

The first thing you have to do is open an inherited IRA in the name of the original account holder for your benefit. Just like the original account holder — in this case, your father — you won't be taxed on the assets until you take a distribution, so your tax hit is spread out. Again, there's no 10 percent penalty.

And you have potentially one more choice to make, depending on whether your father was younger than or older than 70 1/2 when he passed away. The rules are a bit complex, but here, in a nutshell, are your options:

If your father was younger than 70 1/2, there are two methods for taking distributions:

1) The life expectancy method, in which you would have to take an annual required minimum distribution spread over your own single life expectancy, based on Internal Revenue Service life expectancy tables and determined by your age in the calendar year after the year of your father's death. Distributions would have to begin no later than Dec. 31 of the year after the year of death and would be re-evaluated each year. Of course, you could always take more than the required minimum distribution if you wished.

2) The five-year method, which would allow you to take distributions of any amount at any time until Dec. 31 of the fifth year after the year the account holder died, at which time all assets would have to be fully distributed.

If your father was older than 70 1/2, you must use method No. 1. The five-year option doesn't apply. And one more thing: With the life expectancy method, if the original account holder didn't take a required minimum distribution in the year of death, an RMD must be taken from the account by Dec. 31 of the year the original account holder died.

If There's More Than One Beneficiary

If there are several beneficiaries and you've chosen the life expectancy method, it's important to open a separate IRA for each beneficiary; otherwise, distributions will be based on the life expectancy of the oldest beneficiary.

Looking at the Positive

As you can see, there's a lot to think about. I suggest talking to your tax adviser before making a choice. You could also consult IRS Publication 590, which goes into greater detail on all aspects of IRAs.

Though the rules are complex, taking mandatory withdrawals does have its benefits. For one, the undistributed assets keep growing tax-free — which can be a significant boost over time. You could manage the assets according to your own goals and time horizon. And you could name your own IRA beneficiary, potentially one day passing your father's generosity on to your own heirs.

Carrie Schwab-Pomerantz, Certified Financial Planner, is president of the Charles Schwab Foundation and author of "The Charles Schwab Guide to Finances After Fifty," available in bookstores nationwide. Read more at http://schwab.com/book. You can email Carrie at [email protected]. This column is no substitute for individualized tax, legal or investment advice. Where specific advice is necessary or appropriate, consult with a qualified tax adviser, CPA, financial planner or investment manager. To find out more about Carrie Schwab-Pomerantz and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.