The spouse has more options than a non-spouse beneficiary. Here are the four options:
- You can rollover the deceased’s IRA to your own. This is a good option if you are younger than the deceased and can further delay the required beginning date for distributions. It’s also a good option if you are past age 59½ so if you do take money from the IRA once its rolled over, there will be no penalty.
- You can do nothing. You can leave the IRA as is because the option above has no time limit. You can rollover the deceased’s IRA to your name at any time. Note however that distributions of the IRA, if left in the deceased’s name, will need to occur on the same schedule as if the deceased were alive
- You can re-file the IRA as an inherited IRA. This is a good option if you are younger than 59½ but need to make distributions from the account. Since beneficiaries never pay an early withdrawal penalty regardless of age, if you remain in the status of beneficiary, you can take distributions without penalty. You will of course need to take mandatory distributions as a beneficiary using the IRA table for beneficiaries. Each year you use the prior year’s December 31 IRA balance and divide by the divisor from the table. Each year you consult the table for the new divisor that matches you current age.
- You can disclaim the inheritance. Any beneficiary can disclaim the inheritance but few often do if not a spouse.