Spousal IRA question
My client’s husband (mid-40s) is going to be passing very soon and he has an IRA worth about $70,000. I have recommended that when he passes that it might be in her best interest to re-title the IRA as a beneficiary IRA as opposed to re-titling as her own IRA. My reasoning for that recommendation, which is also my question to help clarify my reasoning, is that by re-titling it as a beneficiary IRA it would give my client more flexibility and well as access to the money without the 591/2 rule. Is my reasoning sound??
Permalink Submitted by Alan - IRA critic on Fri, 2013-01-04 01:45
Yes, good decision. Your client will be able to take unrestricted distributions free on penalty as there are death benefits. Further, if she does NOT need the money, as the sole spousal beneficiary, she will not be subject to RMDs until her husband would have reached 70.5. When she should assume ownership is dependent on both their ages, and that year would be after she reaches 59.5. As beneficiary, she needs to determine if there is any basis in the inherited IRA from non deductible contributions. She also needs to name her successor beneficiary ASAP.
Permalink Submitted by Eric Woodfill on Fri, 2013-01-04 01:59
for your insight and confirmation.