Beneficiary rollover by spouse after distributions?
My looong subject says it mostly …
Have a widow, 80, who has taken minimum withdrawals from her husband’s IRA as the beneficiary. Is she still eligible to roll it over into her own IRA at some point or did that option cease when withdrawals began? Her thinking is that there will be a substantial balance at her death and if she can RO, then the beneficiary of *her* IRA will have more time to stretch out distributions …
Permalink Submitted by Alan Spross on Tue, 2007-10-16 01:12
Her thinking is correct, but should have come sooner. A spousal beneficiary can make the IRA her own at any time. There are certain time periods when maintenance of the inherited IRA status can preserve tax deferral such as years before the deceased spouse would have turned 70.5 or years before the spousal beneficiary turns 59.5 and needs distributions that would be subject to early withdrawal if the IRA ownership was assumed.
However, a widow of 80 should have made the change sooner unless her husband was at least 10 years younger. By making the change now, she would likely reduce her RMD, provide a longer stretch to her beneficiary, and also have Roth conversion potential.
Permalink Submitted by James Beidler on Tue, 2007-10-16 01:42
… for the reply. In the widow’s defense, she’s an ultraconservative investor and has an 8 percent forever IRA certificate with the bank … as long as she kept it as a beneficiary.