Inherited IRA

[shirley2629]

What is the name of your state (only U.S. law)? Mississippi

My ex-husband named me as his first beneficiary of his IRA, with our children as seconds. He recently passed away. If this is rolled over to my name, am I going to have to pay taxes on it next year even if I don't take any money out of it?What is the name of your state (only U.S. law)?

[anteater]

If this is rolled over to my name...

Since you were not his spouse at the time of his death, you cannot simply "roll it into your name." The IRS would consider that to be a complete distribution and it would be taxable immediately, basically the same as if you took a lump sum distribution.

You need to have the custodian re-title the account to indicate that it is a beneficial IRA. Something along the lines of, "The IRA of Shirley's Ex-Husband (deceased), for the benefit of Shirley." The custodian should know what to do. (And, when you do that, don't forget to name your own beneficiaries.)

You will have to take annual required minimum distributions and those distributions will be subject to income tax. But, you use your life expectancy to determine the amount of those annual required minimum distributions.

[LdiJ]

Originally Posted by anteater

Since you were not his spouse at the time of his death, you cannot simply "roll it into your name." The IRS would consider that to be a complete distribution and it would be taxable immediately, basically the same as if you took a lump sum distribution.

You need to have the custodian re-title the account to indicate that it is a beneficial IRA. Something along the lines of, "The IRA of Shirley's Ex-Husband (deceased), for the benefit of Shirley." The custodian should know what to do. (And, when you do that, don't forget to name your own beneficiaries.)

You will have to take annual required minimum distributions and those distributions will be subject to income tax. But, you use your life expectancy to determine the amount of those annual required minimum distributions.

It is no longer just a spouse that can roll over an inherited IRA. However I am uncertain about her status as an ex-spouse. I hope that someone else will comment.

[anteater]

Originally Posted by LdiJ

It is no longer just a spouse that can roll over an inherited IRA. However I am uncertain about her status as an ex-spouse. I hope that someone else will comment.

LdiJ: I have this feeling of deja vu all over again. Like maybe we discussed this before?

Unless I missed another change, I think that it is only qualified employer-sponsored plans where a non-spouse beneficiary can now roll over to their own (non-beneficial) IRA.

I don't think that the rules for an inherited IRA changed. Spouses can roll into their own IRA. Non-spouses can't and still must establish a beneficial IRA.

Does not make much sense, but maybe it was a tax revenue-impact kind of thing.