Rollover of inherited IRA by spouse?

Can a spouse rollover an inherited IRA and leave it in the deceased spouse’s name as a “beneficiary IRA”

example – husband passes away while still working – so “IRA” is the company 401k plan – the spouse is under 59.5 so she needs to keep the “inherited / Beneficiary treatment” so she can make withdrawals – however she would like to move the assets to an independent custodian so as to not be limited to the few 401k options

So can a spouse do a rollover and preserve the ability to make pre 59.5 withdrawals?



Generally, this can be done. However, the ability to do this is not in the IRS Regs yet, but was established by PLR 2004-50057. Since it is not formally in the Regs, some plan administrators may refuse to transfer the funds even though the inherited IRA has been set up to receive the transfer.

Since the PPA allows for non spouse inherited IRA transfers, it is illogical to think that options for non spouses would be broader than for spouses, however the spouse does have the sole advantage of rolling over to their OWN IRA account and a non spouse cannot.

Other options:
1) Direct distributions from the plan. There would be no penalty because they would be coded as death benefits.
2) Rollover to spouse’s own IRA and then set up a 72t plan for substantially equal payments. This would generally be a last choice situation.



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