Traditional IRA Options When Owner Died at Age 49
Wife had a traditional IRA. She died suddenly at age 49, spouse(age 52) is sole beneficiary. Their only child is 14. Surviving spouse wants to re-title this IRA and possibly convert to a Roth.
Do I understand correctly that he could keep the registration in deceased spouse’s name and that he could withdraw from the IRA for educational purposes for the son without penalty?
Also, can he convert to a Roth?
And, can he change the investment within the IRA?
Thank You.
MaryDee
Permalink Submitted by Alan Spross on Wed, 2009-12-16 22:48
He can do either:
1) Maintain the IRA titled in inherited format. He can take distributions from the IRA anytime he wishes without penalty because the IRA is inherited and the distributions are coded as death distributions. There is no need to limit penalty free distributions to education or some other exception since ALL distributions are penalty free. . On the other hand, he has no RMD obligation from this account until the year his wife would have reached 70.5, still 21 years away.
2) Assume ownership of her IRA or roll it over to his own TIRA, or convert it to an owned Roth IRA. Income limits for conversions still apply till the end of 2009.
3) Some combination of the above, ie maintain some as inherited and convert another portion to a Roth IRA.
No matter which format he elects, the investments can be changed as often as he likes.