Spousal Inherited IRA and Roth Conversions

Submitted by William Gallagher on Mon, 2022-07-18 14:29

I have a new client who’s husband (age 68) passed away in May 2022. The surviving spouse (my client) is 82. She would like to delay the RMD as long as possible so we discussed utilizing an Inherited IRA so that she can delay the RMD until her deceased husband would have turned 72. However, I have a question regarding the availability of Roth conversions on the Inherited IRA.

I understand that the client (as the surviving spouse) has the option to rollover funds from the Inherited IRA to her own IRA. Can she choose to perform partial rollovers from the Inherited IRA to her own IRA so that she can implement a Roth conversion? Or does she need to rollover the entire balance to her own IRA in order to get access to Roth conversions?



Submitted by Alan - IRA critic on Mon, 2022-07-18 16:09

  • She can do the spousal rollover on any portion of the inherited IRA, although there was a time several years ago where this was not allowed. Some practitioners might recall that and not realize that this changed many years ago.
  • She might be able to delay inherited IRA RMDs an extra year if the Secure Act 2.0 passes and pushes the RBD back a year. In that case, her beneficiary RMDs would not start until the year deceased spouse would have reached 73, or maybe even 74 depending on the exact provisions that become law. Of course, for the portion that is not converted in the meantime, surviving spouse would not actually take the higher beneficiary RMDs once they must begin. She would assume ownership by the end of that first beneficiary RMD year and then use the Uniform Table. Also, note that since husband passed prior to RBD, she cannot calculate beneficiary RMDs (once they would begin) using his younger age, therefore assumption of ownership at that time is the only logical choice. 
  • Since 2022 is the last year she can file jointly, it might be a good year to convert more than usual at the lower joint marginal tax rates. Single rates begin in 2023 unless she remarries. 


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