Yes.
To take advantage of the stretch, the only distributions taken from a retirement account are RMDs. Of course, in many cases RMDs will not be enough to fund retirement expenses. Another factor is that the IRA owner not live so long that the RMD %s get large. By age 86, owner’s RMDs reach 7%.

If the spouse with the larger retirement account balances is older and leaves the accounts to his spouse, the spouse can assume ownership and then reduce RMDs to those of their own younger age. If the younger spouse passes first, the RMDs are accelerated somewhat. The children who survive the surviving spouse can then take RMDs over their single life expectancies when they inherit from the survivor. While the single life expectancy table produces a higher RMD at the same age, if the child is 25 years younger than the parent, the lower age will reduce the RMDs for the first few years. For example, a 56 year old child will have an RMD about the same % as an owner’s first RMD at age 70.5.

Short answer to your question is Yes, as long as the surviving spouse assumes ownership, the children will get the stretch when they inherit. If the survivor fails to assume ownership, in most cases a child successor beneficiary will NOT get the additional stretch and will have to continue the inherited IRA RMD that the surviving spouse was using.

Complexities arise when estate taxes come into play, which will be 3.5 million starting next year and to be determined after that. For estates that large, an AB trust will need to be used in order to use the unified credits of both spouses.

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