Spousal beneficiary
Can a spousal beneficiary choose to break up the dededent’s IRA by keeping part of it as a decedent IRA and rolling the other part into an IRA of her own? I know this can be done with a qualified plan, but I want to verify the same rules apply for IRA’s.
Permalink Submitted by Alan Spross on Tue, 2012-06-19 19:54
Yes, this can be done.
The surviving spouse can simply take a partial distribution from the inherited IRA and roll it over to their own IRA within 60 days. This might be advisable if RMDs become due on the inherited IRA that are larger than needed, but they want a certain amount to remain as inherited so other distributions will be penalty free if surviving spouse is under 59.5.
Permalink Submitted by Robert Schneider on Tue, 2012-06-19 19:59
Thanks Alan,
I figured this could be done, but I have not been able to find written proof.
Permalink Submitted by Alan Spross on Tue, 2012-06-19 20:13
See first paragraph on p 17 of Pub 590.
Permalink Submitted by Robert Schneider on Tue, 2012-06-19 20:42
Perfect! Thanks again.
Permalink Submitted by John Lugauer on Tue, 2014-03-18 12:56
Can the surviving spouse make a (partial) direct trustee to trustee transfer from the Inherited IRA to her own Traditional IRA? The IRA custodian’s seem to have issue with different account titles. Is the best method to use the 60 day rollover rule?Also, can the surviving spouse make several transfers/rollovers to multiple IRA accounts for different investment purposes? I didn’t see any limit in Pub 590.Thanks for clarifying.
Permalink Submitted by Alan - IRA critic on Tue, 2014-03-18 15:22
The surviving spouse can either do a TT transfer or an indirect rollover to their own IRA account. There is no problem with maintaining both an inherited IRA balance for penalty free distributions and moving the portion they are sure they do not need before 59.5 into their own IRA account. However, there is only one indirect rollover allowed in a 12 month period from the inherited IRA. Also. note that if the surviving spouse is the sole beneficiary of the inherited IRA, failure to take any RMD required as beneficiary will result in the account defaulting to ownership status. Finally, the recent tax court ruling that the one rollover limit applies to all of a taxpayers IRA accounts instead of per account means that the surviving spouse should plan on moving funds by direct transfer if several IRA accounts will be maintained.