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SPOUSAL ROLLOVERS AND SUCCESSOR BENEFICIARIES: TODAY’S SLOTT REPORT MAILBAG

By Ian Berger, JD
IRA Analyst

Question:

Good afternoon. We have a client who was 19 years younger than her spouse. He passed away this year. We are planning to keep this as an inherited IRA for now. Can we move the assets to her own IRA at any time?

Thank you, stay safe and have a great day,

Julie

Answer:

Hi Julie,

Yes, a surviving spouse can roll over the deceased spouse’s IRA to her own IRA at any time after death. Often, younger surviving spouses delay doing a spousal rollover until they reach age 59 ½. That’s because, as long as the IRA remains an inherited IRA, the surviving spouse can take a distribution from it before 59 ½ without the 10% early distribution penalty.

Question:

I was in your workshop in February, and I just now have an issue that I would like a clarification.

Vince passed away in 2008, his daughter inherited the IRA and is stretching it over her single life expectancy. She passes away in May of 2020. Is her husband (the listed beneficiary of her stretch IRA) able to be an “eligible designated beneficiary” and continue the stretch, using his wife’s remaining life expectancy?

Sincerely,

Thierry

Answer:

Hi Thierry,

Thanks for attending our 2-Day IRA Workshop for Financial Advisors!

Unfortunately, because the daughter died after 2019, the husband (a successor beneficiary) cannot “step into her shoes” and continue the stretch. Instead, he is subject to the new 10-year payout rule under the SECURE Act. He is not required to take annual RMDs and can take as much or as little as he wants each year. However, he must empty the entire inherited IRA by December 31, 2030.

https://www.irahelp.com/slottreport/spousal-rollovers-and-successor-beneficiaries-today%E2%80%99s-slott-report-mailbag

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Investment advisory services are offered through Foundations Investment Advisors, LLC and is a SEC registered investment advisor.

Investment advisory services are offered through Donato Wealth Management and is a SEC registered investment advisor.