IRAs Upon Death of Owner-Beneficiary Spouse

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Question:

On IRAs, upon death of the owner, may the beneficiary (spouse) roll that amount into their own IRA? And, can the beneficiary spouse receive the entire IRA as a distribution.

Answer:

A spouse has an expanded array of options when he or she inherits a deceased spouse's IRA. The options include a rollover of the decedent's IRA into an IRA in the name of the surviving spouse. Any individuals inheriting an IRA, including a surviving spouse, may choose a pattern of distributions based on their life expectancies or simply withdraw the entire amount. The latter decision will generally maximize the individual's income tax liability.

Every employee who might discuss IRAs with bank customers should go through some basic training that addresses this information. At a minimum, those employees should review the "plain language disclosure" given to customers who open IRAs as it will definitely discuss these issues.

First published on BankersOnline.com 1/7/13