Inherited IRA

Options For a Spouse IRA Beneficiary (When The IRA Owner Dies Before The Required Beginning Date)

The designated spouse IRA Beneficiary of a deceased IRA owner’s traditional or SIMPLE IRA has the following distribution options when the IRA owner dies before reaching the Required Beginning Date (April 1st of the year following the year the IRA owner turns age 70 �): 

• Rollover the IRA into the surviving spouse’s existing or new IRA.
• Five-Year Rule: Withdraw all assets either in a “lump sum” or in installments by the end of the fifth full year following the year of death of the IRA participant.

If the spouse is the sole designated IRA Beneficiary, he or she has the following additional options: 

• Distribute based on the single Life Expectancy of the spouse beneficiary.

The distributions must begin by the end of the year (December 31st) following the year of the death of the IRA owner, or the year the IRA owner would have been 70 � years old, whichever is later. 

The Life Expectancy factor used to calculate the surviving spouse’s RMD while the spouse is alive is based on the spouse’s age as of his or her birthday in each year for which a distribution must be made. 

If the spouse beneficiary were to pass away after distributions start, but before the IRA is exhausted, distributions may continue based on the remaining Life Expectancy of the spouse beneficiary, determined on a non-recalculated (term-certain) basis. 

• Elect to treat the decedent’ s account as the surviving spouse’s own IRA: If the spouse is the sole designated beneficiary and has an unlimited right of withdrawal, the spouse may “elect” to treat the IRA as his or her own by changing the name on the account to that of the surviving spouse. The surviving spouse is automatically deemed to have made this election if the spouse either:

i. Makes a contribution to the account or 

ii. Fails to start taking RMD by the later of December 31st of the year after the IRA owner’s death or the year the IRA owner would have attained age 70 �.