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 .
H. Daniel Lively, Esq., LL.M., CPA Certified Tax Specialist, CA Board of Legal Specialization firstname.lastname@example.org www.USTaxRescue.com 714-708-2593 Mr. Lively is a Certified Tax Specialist by the State Bar of California Board of Legal Specialization. He can be reached at 714-708-2593 or USTaxRescue.com.Any individual seeking legal advice for their own situation should retain their own legal counsel as this response provides information that is general in nature and not specific to any person's unique situation. Circular 230 Disclaimer - Advice given in this response cannot be used to eliminate penalties with the IRS or any other governmental agency.
5 lawyers agree
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!
No legal representation exists by virtue of this answer. Consult your attorney. Licensed to practice law in Indiana and Illinois. Circular 230 Disclosure: any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any matters addressed herein.