Advanced Underwriting Consultants

Question of the Day – August 9

Ask the Experts!

Here’s the question of the day.

Question: My client’s husband died earlier this year.  She is a 50% beneficiary of his IRA, along with their son who is beneficiary of the other 50%.  Can she roll over her 50% interest into her own IRA?

Answer: The general rule is that the surviving spouse must be the sole beneficiary of an IRA to be eligible to make a rollover into her own account.

If the account remains intact, with a combined spouse/son beneficiary combination, RMDs must be taken from the account by the beneficiaries based on the age of the older beneficiary.  In this case, that’s probably the surviving spouse’s age.  The first RMD would be due by the end of the year after the decedent’s death.

On the other hand, it’s possible for the inherited account to be separated.  The current IRA custodian should be consulted to find out their procedure for separating into separate beneficiary accounts.  If the separation is done by September 30 of the year after the decedent’s death, each beneficiary will considered to be the sole beneficiary of their portion of the IRA.

If separation is completed before the deadline, the surviving spouse will be able to exercise a rollover to her own IRA from her portion if desired, and the son can elect to stretch distributions from his separate part based on his own age.

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