Spousal Bene IRA Conversion

Submitted by John Boyle on Thu, 2022-12-01 22:30

I know a non-spouse beneficiary IRA cannot be converted to a Roth IRA, but if a spouse (under 59.5) has a spousal beneficiary IRA, can it be converted to a Roth IRA?



Submitted by Alan - IRA critic on Thu, 2022-12-01 23:20

  • Yes, the spouse can elect to assume ownership of the inherited IRA, and can then convert it by either transfer or 60 day rollover.
  • However, if the spouse will need distributions prior to 59.5, they may instead be interested in a conversion to an inherited Roth IRA where all distributions would be penalty free. with the intent to assume ownership after reaching 59.5. This option is not mentioned in the IRS Regs, but neither is there any provision that suggests that it is not allowed. Since this is a rarely requested type of transfer with no clear guidance, custodians may be reluctant to process it.

Submitted by David Mertz on Fri, 2022-12-02 02:03

With regard to converting to an inherited Roth IRA, I reach a different conclusion.  Section 408(d)(3)(C)(i) prohibits the rollover of a distribution from an inherited IRA.  Section 408(d)(3)(C)(ii) permits a surviving spouse to roll over a distribution from the deceased spouse’s IRA by permitting the distribution to be treated as *not* coming from an inherited IRA.  If the distribution is treated as not coming from an inherited IRA, it seems impermissible to roll it over to an inherited (Roth in this case) IRA and would instead have to be rolled over to the surviving spouse’s own IRA.

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