Can Spouse owned beneficiary IRA roll to Spouse’s own IRA?

Submitted by Aaron Tanner on Thu, 2016-05-05 15:16

If a spouse chooses to accept his/her deceased spouse’s Traditional IRA as a beneficiary IRA instead of their own Traditional IRA, is there an option later to roll the beneficiary IRA into the beneficiary spouse’s own Traditional IRA?

Basically want to know if the beneficiary IRA received from spouse with an RMD based on the single life table can be rolled into the Spouse’s own Traditional IRA so the RMD will be based on the uniform lifetime table. (unwinding a bad decision made at prior custodian)



Submitted by Alan - IRA critic on Thu, 2016-05-05 18:14

If a spousal beneficiary rolls over an inherited IRA in any year after the year of death, they are treated as if they owned the IRA the entire year. This rollover (or better yet transfer) can be done right away or years afterward as there is no time limit.  This would effectively change the RMD to the Uniform Table for that year. For the year of death however, the RMD amount is the amount the decedent would have been required to distribute had they lived the entire year. Either way, because of the number of rollovers being restricted to one for all IRAs whether owned or an inherited interest, it is best that it be done by non reportable direct transfer instead of doing a 60 day indirect rollover. In addition, with a direct transfer no RMD is deemed distributed, but with a 60 day rollover the decedent’s RMD is considered to be distributed if not yet satisfied, and if it is included in the amount rolled over, it creates an excess contribution to surviving spouse’s IRA.



Submitted by Aaron Tanner on Fri, 2016-05-06 15:26

I’m still confused as to whether both of the following two scenarios are allowed to roll into Jane’s own Traditional IRA:  1. John is deceased.  Jane (spouse and beneficiary) leaves John’s IRA in John’s name (RMD based on John and uniform lifetime table).  At any time now or in the future Jane can opt to rollover or transfer John’s IRA to Jane’s IRA (RMD based on Jane’s uniform lifetime table).  Correct?  2. John is deceased.  Jane (spouse and beneficiary) transfers John’s IRA into an inhertied IRA titled “IRA fbo Jane B/O John deceased” (RMD based on Janes single life table).  At any time now or in the future Jane can opt to rollover or transfer her inherited IRA to Jane’s own IRA (RMD based on Janes uniform lifetime table)?  Still correct?I feel like you already answered scenario   1. in your reply to my original post, but I’m still not clear scenario   2. is allowed.



Submitted by Alan - IRA critic on Fri, 2016-05-06 16:36

  1. Correct. But those RMDs would be insufficient except for the year of John’s death. There is a default rule that states if the beneficiary fails to complete the full RMD required as beneficiary, the IRA defaults to ownership by that beneficiary. RMD then changes to beneficiary age and Uniform table since beneficiary now owns the IRA.
  2. Also correct. Beneficiary can assume ownership anytime they want and RMDs change to the Uniform Table which will always be lower than the single life table. However, once the inherited IRA is changed to ownership status the beneficiary cannot change back. This sometimes happens if the beneficiary is under 59.5 and needs distributions for living expenses and faces a 10% penalty for an owned IRA distribution, but the penalty would not apply if the IRA was left in inherited status until beneficiary reached 59.5.


Submitted by Aaron Tanner on Fri, 2016-05-06 19:55

Appreciate your help very much.



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