Spouse inheriting 401k
Is there any reason for a spouse to transfer her husbands 401k plan to an inherited IRA as opposed to her own IRA, if she is 61 years old and husband was older?
Is there any reason for a spouse to transfer her husbands 401k plan to an inherited IRA as opposed to her own IRA, if she is 61 years old and husband was older?
Permalink Submitted by Alan Spross on Fri, 2009-04-17 02:30
No. With her own IRA RMDs do not begin for 9 years. With an inherited IRA, they would begin sooner and would be larger. On the other hand, if funds are needed there is no early withdrawal penalty either way. Moreover, with an inherited IRA, if the surviving spouse passes after her RMDs have begun, her younger beneficiaries will lose out on the stretching potential since they will be treated as successor beneficiaries.