Should I Inherit My Deceased Spouse’s Traditional IRA?

If you inherit a traditional IRA from your deceased spouse, there are different options to consider. To help you make an informed decision, we have created the “Should I Inherit My Deceased Spouse’s Traditional IRA?” flowchart. Here are some key factors to consider:

Inheriting the IRA vs. rolling it into your own traditional IRA: You have the option to inherit the IRA as a beneficiary or roll it over into your own traditional IRA. The decision will depend on your age, financial needs, and tax implications.

10-Year Rule vs. Life Expectancy Rule: Under the SECURE Act, most beneficiaries must distribute the inherited IRA within 10 years, unless they qualify for an exception. However, if your spouse passed away before January 1, 2020, you may be eligible for the Life Expectancy Rule, which allows you to take distributions over your life expectancy.

RMD calculations: You will need to calculate the required minimum distributions (RMDs) based on your age and the value of the IRA. If you choose to inherit the IRA, RMDs will be required starting in the year after your spouse’s death. If you roll it over into your own traditional IRA, RMDs will be required based on your age.

Age and income needs: Depending on your age and income needs, it may be more beneficial to inherit the IRA or roll it over into your own traditional IRA. Inheriting the IRA may provide immediate income, while rolling it over may provide greater tax benefits and control over distributions.

Overall, the best option for you will depend on your individual circumstances. It is important to consult with a financial advisor and tax professional to determine the most appropriate course of action.

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Robert J. Pyle, CFP®, CFA, AEP® founded Diversified Asset Management, Inc., in 1996 to provide personalized, comprehensive wealth management services to successful individuals, families, single women, and business owners. His specialty is addressing the complex financial needs of self-employed professionals, corporate executives, and small-business owners. Our disclosure can be found here. The views, opinion, information, and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc. Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting, or tax advice.