If I understand IRS rules, a spouse who inherits an IRA from a dead spouse can treat it as her/his own: roll it, use Uniform RMD table (if less than 10 yr. age spread), etc. A non-spouse beneficiary must keep it separate,, begin RMDs, and use the Single Life (Table I) vs. Uniform tables (Table III). Am I close to correct? If not please correct my understanding. Now, what treatment is given when a spouse inherits an IRA from a dead spouse and the dead spouse previously inherited it from a non-spouse? Do the spousal rules kick in or does it have to continue as a separate non-spousal beneficiary IRA?
Your understanding appears correct. This is a mine field of an area and it is often best to have a tax professional navigate you through it. Spouse beneficiaries may rollover inherited IRAs to their own IRAs or to any other qualified retirement account, such as one provided by an employer. The amounts in the inherited IRA thus become subject to tax rules as if the inheriting spouse had established the account for herself. No distributions are required from the inherited IRA. Instead, distributions are based on the rules for the surviving spouse. Required minimum distributions begin at age 70½. Tax penalties exist for distributions taken before age 59½ .
Question one, yes, correct.
Question two, best to follow Mr Lively's apt advice to seek advice from a qualified professional with all the details at hand. A minefield indeed.
Good book out there on IRAs by Natalie Choate if you are into that kind of stuff. Seems like you may already know enough to give yourself a headache. Good luck!