A surviving spouse can convert the balance they inherited from their deceased spouse at anytime. There is no need to move the funds to an owned TIRA first. Of course, they also may wish to convert part of the inherited IRA and roll the rest into their own TIRA account in order to avoid spiking their marginal tax rate with a total conversion. Any combination is possible. They could convert part and leave the rest as an inherited IRA. Implications vary with the age of the decedent and age of the surviving spouse.

With respect to RMDs, if the surviving spouse converts in the same year they inherited the IRA, the decedent’s RMD for that year must be distributed first.
If they convert in a later year, they are treated as if they were the owner the entire year. This means that if they are subject to RMDs (age 70.5+), they must distribute that RMD before converting.
This is a little tricky because the conversion in this situation occurs at the same time the funds are rolled over even if the rollover is to an owned Roth IRA. If the surviving spouse needed to take an RMD as the beneficiary of the IRA, that RMD is erased by the rollover or assumption of ownership. A new RMD based on ownership may apply instead of an inherited IRA RMD.

If the surviving spouse inherited basis from the decedent, that basis is added to any they may have in their own TIRA, and it would result in the conversion being less than fully taxable.

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