38 yr old widower, keep IRA in spouses name for max flex?
The 47 year old wife of my client recently passed away. The surviving spouse is only 38, and has some health issues. I would like to leave the wife’s IRA in her name (spouse is beneficiary). If the surviving spouse ever needs this cash, he can withdraw with no 10% penalty, before 59.5. Looking very long term, we would roll the IRA over to the surviving husband’s IRA, before the deceased spouse would have turned 70.5. Are there any flaws to this strategy?
Ann
Permalink Submitted by Alan Spross on Fri, 2008-04-04 18:34
No flaws, and this is the way to go to preserve access to the funds without penalty. Note that even if your client forgot to do the rollover at age 61 (when spouse WOULD HAVE reached 70.5), failing to take the RMD as a beneficiary would default to deemed assumption of ownership of the account, and another 9 years without an RMD requirement.
Just be sure he names a successor beneficiary ASAP.
Permalink Submitted by Al Fry on Sat, 2008-04-05 02:13
Also, the IRA should not be “left in the wife’s name”, it should be retitled as an inherited IRA: “Husband’s name as bene of Wife’s name”.