The Deadline for Spousal IRA Rollover

clock top by laffy4kYou’re going through a lot, having to deal with your spouse’s untimely passing… and you have plenty of decisions that have to be made with regard to handling his or her final affairs.  All of the non-qualified accounts must be dealt with as the will or probate determines, and you (or the estate’s representative) have to work through all of those arrangements.  It’s difficult to deal with all of these things, but you have to do so. But there’s a bit of good news for you:  you don’t have a deadline for dealing with the IRA(s) that you have inherited yourself.

The Spousal Inherited IRA

If you’ve inherited an IRA from your spouse, you have several choices in how to deal with it – described in this article.  But the thing about it is, you’re not required to do anything at all immediately.  You can leave this account alone and do nothing with it at all for the present.  (see Note below for complications) Of course, if you do nothing with the account, you can choose to begin taking Required Minimum Distributions (RMDs) immediately – but this doesn’t have to occur either.  If you simply leave the account as it is and do not take any RMDs from the account, it will be considered your own IRA by default, and you can treat it as such, making contributions, etc., and taking distributions when allowed.  But there’s nothing that requires you to do anything. Note:  A complication comes about when the IRA is bequeathed to any other person or entity in addition to the spouse of the original account owner.  This would apply if the spouse and children are splitting the account, or if part of the account is to be transferred to a charity or a trust, for example.  In a case like this, you would need to split the account to the other heirs (as described in this article) first, leaving your spousal portion as a remainder in order to treat the account as described above.  This has to be completed by the end of the calendar year following the year of the original account owner’s death.
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IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (or in any attachment) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in this communication (or in any attachment).

About the author

Jim Blankenship, CFP®, EA

Jim Blankenship is the founder and principal of Blankenship Financial Planning, Ltd., a financial planning firm providing hourly, as-needed financial planning and advice. A financial services professional for over 25 years, Jim is a CFP professional and has earned the Enrolled Agent designation, a designation that qualifies him as enrolled to practice before the IRS. Jim is also a NAPFA-registered financial advisor, which designates him as a Fee-Only Financial Advisor.

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