Spouse Inherited IRA & distribution options

Submitted by Amanda M on Wed, 2022-01-05 16:16

We want to make sure we are not missing any option for the surviving spouse to get a much needed distribution for funeral expenses, so asking the experts!
A 53 year old lady just lost her husband and will inherit his IRA. He had turned 58 in August, and date of death is 12/17/2021. Is there a benefit to her doing a bene IRA vs treating it as her own? Does she have any options at all to take the distribution and avoid the 10% early withdrawal penalty (it seems that death might be an exception)?
Just want to make sure we handle it correctly when it comes to transferring the funds to an IRA for her and would appreciate any advice!
Thank you!



Submitted by Amanda M on Wed, 2022-01-05 19:20

I continued to research, and it appears that if she remains a beneficiary there is no 10% penalty on pre-59 1/2 distributions.  Does her deceased husband’s age factor in at all?  He was 58 when he passed away.  Thank you!

Submitted by Alan - IRA critic on Wed, 2022-01-05 19:53

In this situation she should maintain the IRA as inherited so that any distributions she needs before 59.5 will be penalty free. In addition, she has NO beneficiary RMDs until the year husband would have reached 72 (2035). However, if she assumes ownership of the inherited IRA once she reaches 59.5, distributions will still be penalty free, and her RMDs as the owner do not start until 2040.  In summary, keep it as inherited, but elect to assume ownership right after reaching 59.5.

Submitted by Amanda M on Wed, 2022-01-05 20:27

Thank you for the clarification…it is much appreciated.

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