Inherited IRA

Submitted by Erwin Buck on Thu, 2016-10-13 18:10

Why would a surviving spouse create an inherited IRA from the deceased spouse IRA?



Submitted by Alan - IRA critic on Thu, 2016-10-13 19:21

  1. Most common reason would be a surviving spouse who is under 59.5 and needs to take penalty free distributions.
  2. Surviving spouse is or will soon be over 70.5 but deceased spouse was much younger. Beneficiary RMDs for a sole surviving spouse do not start until deceased spouse would have reached 70.5. RMDs could be delayed longer.
  3. An inherited IRA must be established by most custodians and titled as such before a rollover is done. The surviving spouse might do this while she researches whether to assume ownership or not or before rolling it over. This allows surviving spouse to name a successor beneficiary immediately.
  4. Surviving spouse can roll over any portion of an inherited IRA and leave the rest as inherited. This might occur when the surviving spouse expects to need only some of the balance for  penalty free distributions prior to 59.5.

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