IRA contribution for spouse that has passed away
Husband passed away in July 2009 and was full time employed (earned more than $6000). Is it possible for his spouse to make a contribution into his IRA for 2009 even though he has passed away?
Thank you
Permalink Submitted by Alan Spross on Tue, 2009-08-25 20:20
No, but the surviving spouse can make a spousal contribution using his earned income if filing a joint return for the year of his death. The usual limitations apply based on the age of surviving spouse, and include whether a TIRA contribution would be deductible or not, or whether modified AGI was too high for a Roth contribution.
Permalink Submitted by [email protected] on Wed, 2009-08-26 14:07
Thanks Alan,
I have more questions:
His current plan is a 401K and I was going to move it into an IRA in her name and add $6000.
Since she is retired, no earned income, is this possible.
Thanks for your help…
Permalink Submitted by Alan Spross on Wed, 2009-08-26 18:22
Yes, the 401k can be rolled over, but if surviving spouse is under 59.5, IRA distributions will be subject to the early withdrawal penalty. If she takes distributions from the 401k, they are death distributions and not penalized. However, the 401k plan may not allow her to take discretionery distributions whenever she wishes.
The 401k rollover is unrelated to the 6,000 spousal contribution. She can do either or both. If the 401k contains after tax contributions, then that portion would be tax free upon distribution, or if rolled to her IRA she should file an 8606 reflecting the added basis. Finally, if the 401k contains highly appreciated employer stock, the potential for NUA should be considered prior to a rollover since an IRA rollover forfeits any NUA benefits.