Spousal election for inherited IRA
I have a new client that elected to treat her spouse’s IRA as an inherited IRA instead of treating it as her own Her husband died in 2012 at the age of 75. My client is currently 76. I am unnsure why she would have elected this option? Perhaps it had something to do with a RMD her husband didn’t take in 2012 and this is the only way she could have taken one after he died to satisfy the RMD for 2012? The question is can she now elect to treat the IRA as her own going forward and are there any advantages or drawbacks to keeping the way it is or changing?
Permalink Submitted by Alan - IRA critic on Tue, 2013-10-29 18:31
At their respective ages there is no advantage to keeping the IRA in inherited status, but several disadvantages including higher RMDs and loss of the stretch for younger beneficiaries of her IRA. The 2012 RMD of her husband can be satisfied just as easily after assuming ownership as before that time. She should now roll the IRA over to her own name and her RMD for 2013 will be reduced accordingly. She should of course name her own beneficiary. Her prior decision could have been part emotional or perhaps the decision points were not explained to her.