Inherited IRA to Traditional IRA

Submitted by Anthony Capristo on Thu, 2019-10-17 17:23

If a spouse is the 100% beneficiary of an IRA, and instead of taking it as their own they take it as a bene IRA, do they have the ability to take the bene IRA as their own IRA whenever they would like? Or trustee transfer from that bene IRA to an already existing IRA they have?



Submitted by Alan - IRA critic on Thu, 2019-10-17 18:25

  • Yes, the spouse can elect to assume ownership of the inherited IRA, or roll it over to their own IRA at anytime. For example, if the beneficiary spouse is not yet 59.5, they would likely maintain the IRA as inherited until reaching 59.5 to eliminate the early distribution penalty if they may need funds. Then when reaching 59.5, they would probably elect to assume ownership of the inherited IRA and could then transfer it to another IRA they already own to consolidate into a single IRA. However, once they acquire ownership, they can never return it to inherited status. 
  • Note that while they maintain the IRA as inherited, should they fail to complete any beneficiary RMD that may become due under the RMD rules, a sole beneficiary spouse will be deemed the owner EVEN if the account has not yet been retitled. So if they wish to remain as the beneficiary, they must complete any beneficiary RMD by the end of the RMD distribution year. Beneficiary RMDs do not begin for a sole beneficiary spouse until the year that the deceased spouse would have reached 70.5.

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