Rollover from Deceased Husband’s IRA to Surviving Spouse IRA

Submitted by Todd Kirsch on Thu, 2019-03-28 16:46

The husband recently died with an IRA in his name at another firm. The wife is the sole beneficiary. The IRA is still titled in the husband’s name. My back office has advised that, to do a trustee-to-trustee transfer to her IRA with our firm, the wife must set up a new account at the old firm and have the proceeds titled as her IRA. The advisor for the other firm is suggesting that the wife simply withdraw the funds from the husband’s IRA at his firm and deposit such funds into her IRA within 60 days. Do the 60 rollover rules allow this? If so, what other disadvantages might there be to doing such a rollover?



Submitted by Alan - IRA critic on Thu, 2019-03-28 17:17

  • The 60 day rollover rules allow this for amounts in excess of the husband’s RMD, but the advisor’s advice is careless. The one rollover limit for 12 months applies to distributions reported to the wife for either her own IRAs or inherited IRAs from a spouse. Therefore, without even knowing if the wife has a rollover available taking a distribution could be very costly since it may not qualify for rollover.
  • Therefore, based on the age of the decedent and the surviving spouse which are needed to determine if an inherited IRA or a spousal rollover is preferable, if it turns out that the spousal rollover is preferable (she should probably be at least 59.5) the best way to handle that rollover is to first have her notify the inherited IRA custodian that she elects to assume ownership of the IRA. The custodian will likely transfer it to a new account rather than re title the original account. The new account can then be transferred in a non reportable transfer to your firm. There will be no 1099R, there will be no RMD distributed and no risk of rolling over an RMD, and there is no chance of running afoul of the one rollover limit. Of course, she still must complete the RMD for the year of death if husband did not complete it, but this is more easily done once she has full control of the IRA. Husband passed early in 2019 (?) so probably did not complete his 2019 RMD if he passed after the RBD.

 

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