Deceased Spouse IRA | Ed Slott and Company, LLC

Deceased Spouse IRA

Client passed away in early March 2020. He was married and age 52 with a 401k valued at $800,000. Widow also age 52 and expects a decent life policy claim and may not need any of the retirement benefits prior to age 59.5.

However she wants to know she can tap some funds if needed prior to age 59.5.

I know 457 exceptions are different than IRA in some cases. If she moves her deceased spouses 457 plan to her TIRA then only the known exceptions will apply to a cash unforeseen cash need.

With Bene IRA rules being changed in 2019 is their a best alternative? I was thinking of moving 200k to a Bene IRA to allow access before 59.5 and remainder to her existing T IRA but don’t know if current 457 custodian could process such a request .

If it all moves to a Bene IRA I assume it follows the old life exp tables using living spouses DOB as before? Thinking this would be best to allow access but dislike she would have to take a annual RMD regardless if needed for rest of her life.

Any suggestions/concepts would be appreciated.

The provision where a spousal beneficiary does not have to start RMDs until the deceased spouse would have reached 72 still apply. Therefore, she might do a direct rollover to an inherited IRA and leave that account in place until she reaches 59.5, then roll the inherited IRA over to her own IRA. She would not need to take any RMDs from the inherited IRA, but if she needed funds she could take a distribution from the inherited IRA penalty free.

 

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