Spouse inherited an IRA
Alice inherited an IRA from her spouse several years ago and has been treating it as an inherited IRA with yearly RMDs up to now. She is over 59-1/2. Can she treat the IRA as her own at this point? Must she first take the RMD from the inherited IRA for this year? What’s involved in “treating the IRA as her own”? Is it just a matter of retitling the account?
Thank you for your help.
Permalink Submitted by Alan - IRA critic on Thu, 2023-03-02 15:40
She should contact the inherited IRA custodian and make an election to assume ownership of the account. The custodian will then transfer the assets into a new IRA with her titled as the owner. This is a non reportable direct transfer, and she will be treated as owning the IRA for the entire year. Therefore, if she is not yet RMD age there will be no RMD required for 2023. If there is any IRA basis in the inherited IRA it will transfer to her owned IRA and she must file Form 8606 showing the transferred basis on line 2 of Form 8606.