Spousal Election

A spouse who passed away in 2017 at the age of 47 had a SEP IRA. The SEP IRA listed the spouse as the primary beneficiary. At the time of the spouse’s passing, the SEP IRA was moved to an Inherited IRA in the surviving spouse’s name. The reason was if the spouse needed funds from the IRA, she would not be penalized the 10% since she was / is under 59.5 by moving it to an Inherited IRA.

Today, the surviving spouse has outside assets and does not need funds from the Inherited IRA. Can the Inherited IRA designation be moved to the surviving spouse’s personal IRA? The surviving spouse may want to convert those assets to Roth?



Yes, a sole spousal beneficiary can elect to assume ownership anytime up to the later of the end of the year following the year or the year that the surviving spouse reaches RMD age (73 in this case). However, the surviving spouse is probably better served by retaining a balance in the inherited IRA accessible without penalty, and take partial distributions (subject to withholding election) to be rolled over to a Roth IRA only with funds that will not be needed for at least 5 years since conversions must be held 5 years to avoid the 10% recapture penalty until reaching 59.5.



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