From 24/7 Wall St. · David Beren · · 1m 20s
Widow Keeps IRA in Husband's Name for Decade-Long Tax Deferral
Widow retains IRA in deceased husband's name to delay tax withdrawals until he'd turned 73, avoiding 10% early distribution penalty.
In brief
Widow retains IRA in deceased husband's name to delay tax withdrawals until he'd turned 73, avoiding 10% early distribution penalty. Widow can delay IRA withdrawals for up to a decade by keeping account in deceased husband's name instead of rolling it over. Originally reported by 24/7 Wall St..
Spousal Rollover Default
Most custodians steer surviving spouses toward rolling IRAs into their own names, but this forfeits tax deferral for up to a decade.
Inherited IRA Advantage
Keeping the IRA in the deceased spouse's name delays tax withdrawals until the year the decedent would have reached 73.
Tax Penalty Avoidance
Widows under 59 and a half avoid the 10% early distribution penalty by staying a beneficiary instead of rolling the IRA.
SECURE 2.0 Rule
The SECURE 2.0 Act sets the required beginning age at 73, but allows surviving spouses to delay distributions until the decedent's age.
Reversibility Limitation
A surviving spouse can roll an inherited IRA into her own name later, but cannot reverse the rollover once completed.
Tax Impact
Deferral years help control Medicare premiums and allow Roth conversions at chosen tax brackets.
Children's Inheritance Risk
Non-spouse beneficiaries face a 10-year rule for withdrawals, potentially triggering early tax penalties.
The one thing
Widow can delay IRA withdrawals for up to a decade by keeping account in deceased husband's name instead of rolling it over.
