Spouse inherits or takes over IRA??
I have a client whose father passed away this year. His mother inherited an IRA from her husband. Am I correct in that if she treats it as an inherited IRA (titled properly) that when she dies her sons will have to use the remainder of her life expectancy to withdraw any funds left in the account if they are listed as sucessor beneficiaries
If that is true can she treat the IRA as an inherited IRA and then change her mind and decide to treat it as her own – so she could make her sons designated beneficiaries so they could stretch it out over thier lifetimes?
Permalink Submitted by Alan Spross on Wed, 2008-12-10 22:05
David,
There is an exception to the successor beneficiary RMD rules if the surviving spouse passes prior to when her inherited IRA RMDs must begin. A sole surviving spouse does not have to start RMDs on an inherited IRA until the year the deceased spouse would have reached 70.5. If the surviving spouse passes prior to that the time the RMD is required, that surviving spouse is treated as the owner, and the successor beneficiaries are allowed to use their own life expectancies. Both of these concepts are outlined on p 37 of Pub 590.
Once the inherited IRA becomes subject to RMDs, the spouse may wish to roll it over. There can be a conflict if the rollover is done to preserve the stretch for the children, but before the survivor is 59.5. That could expose the survivor to early withdrawal, so there is a trade off to be considered at the time that RMDs would have to begin.