SOLE Spouse beneficiary vs not Sole; Confused about Inherited RMD options
Obviously there are more options available to a SOLE spouse beneficiary – But WHICH advantages apply to a “not sole”?
For simplicity, no trust is involved. Husband is IRA owner and Wife is Surviving Spouse.
Question #1 I presume SOLE beneficiary could apply to a single IRA account. Hence if the husband has 2 completely separate Traditional IRA accounts – and he makes his wife sole bene to IRA #1 and his kids bene’s to IRA #2 –
Then the wife is Sole bene of her #1 account right? (with all the possible benefits).
NOTE: Had both spouse AND kids been bene’s of just one IRA -I presume “SOLE” beneficiary would not be applicable to spouse – even if they “separated” her inherited portion into her own account (is that correct?)
Question #2 If she’s NOT the “sole beneficiary”, then if the husband/IRA owner had NOT reached their Required Beginning Date for RMD’s at death, it seems at least SOME sources say (including the IRC code itself (401(a)(9)(B)(iv)), but not most of the regs) she can STILL WAIT until he would have reached RMD age before she has to start taking RMD’s. (But I’m confused because most of the regs specify she has to be SOLE spouse (say) to elect 327 provision to be treated as the “employee”.)
I happen to be interested in the rules both OLD (pre-2020 death, before SECURE Act rules), 2020-2023 if different, and 2024/2025 onwards rules (which are under the final or new proposed regs)- If anyone knows of differences.
Question #3 – Can even the non-Sole spouse ROLL OVER into their own IRA account? (I’m certain I read somewhere that they can, but after reading the “new” (in 2024) proposed regs my head is spinning… )
Thanks so much for ANY answers!!
Permalink Submitted by Alan - IRA critic on Tue, 2025-05-20 20:36
The IRS Regs are not totally clear on these questions, the main question being whether a surviving spouse who is not the sole beneficiary of the spouse at the time of death can become the sole beneficiary using the separate account rules and then elect to assume ownership of the inherited IRA rather than doing a 60 day rollover to their own IRA of the portion that was not a beneficiary RMD for that year.
The separate account rules do appear to be broad enough to allow the spouse to be treated as the sole beneficiary of the timely created separate account (deadline 12/31 of the year following the year of death). This predates the Secure Act and continues to apply. The surviving spouse can then delay beneficiary RMDs until the year that the deceased spouse would have reached RMD age and can also elect to assume ownership of the inherited IRA at any time. Further, the new option from Sec 327 of Secure 2.0 should allow that spouse to be treated as the IRA owner for RMD purposes only (using the Uniform Table for beneficiary RMDs) if they wish to use this option before eventually electing to assume actual ownership for all purposes.
Your Q 1 – the answer is that the spouse is the sole beneficiary of IRA 1 only. But if there was only one IRA with spouse and kids as beneficiary, the spouse should be able to establish a separate account and then be treated as the sole beneficiary of that account with the accompanying benefit. However, if the spouse does not create the separate account by the deadline, they could not be treated as the sole beneficiary but could still take a distribution and roll it over to their own IRA.
Q 2 – Included in above response.
Q3 – the term “spousal rollover” is confusing as used. It appears to describe both the assumption of ownership which is a non reportable transfer, and the 60 day rollover to spouse’s own IRA, which is a 60 day rollover subject to the one rollover limit and if there is a beneficiary RMD due for that year, that portion is not eligible for rollover. A spousal beneficiary who is not the sole beneficiary can always do the 60 day rollover, but as described above that is less efficient than being able to assume ownership.
It also follows that the default rules for assumption follow. For example, if the spouse timely creates the separate inherited IRA, then fails to take a full beneficiary RMD when required, the spouse defaults to ownership treatment.