Inherited IRA from Spouse
Client who had accounts held directly with custodian and wasn’t our client when his wife passed away in 2018 – husband was primary beneficiary (100%) of her IRA – he took it over as a beneficiary IRA at the time. Now that he’s a client of ours we would like to simplify things – can a spouse now combine the IRA from his wife that is titled as a beneficiary IRA into his own IRA even though it’s been titled as an inherited IRA for 6 years?
Permalink Submitted by Alan - IRA critic on Wed, 2024-05-08 15:45
Yes, he can elect to assume ownership and be treated as the owner for the entire year and the RMD will be lower than the beneficiary RMD. This will also eliminate a reportable rollover and avoid exposure to the one rollover rule. Therefore, the process would be to elect to assume ownership and after the IRA has been retitled with him as owner, do another direct transfer to his own IRA. That way, no beneficiary RMD, no 1099R, and no tax reporting needed on the 1040.