If you are the surviving spouse and sole beneficiary of your deceased spouse’s IRA, you can elect to be treated as the owner of the IRA and not as the beneficiary.
What was the original value of my house when my husband died?
Your half of the house is still at its original tax basis of $150,000 (half of the original $300,000 purchase price), but your husband’s half of the house stepped up to $275,000 when he died (half of the house’s value on the day he died of $550,000). Add $150,000 to $275,000, and you get $425,000 as the tax basis of your home.
When do spouses have to take distributions from inherited IRAs?
Spouses have 60 days from receiving the inherited distribution to roll it over into their own IRA as long as the distribution is not a required minimum distribution. By combining the funds, the spouse doesn’t need to take a required minimum distribution until they reach the age of 72.
What are the options for an inherited IRA?
Spousal Inherited IRA: The most common type of inherited IRA is the spousal IRA. A spousal IRA means you have lost a spouse and they designated you as a primary beneficiary. When you receive an inherited IRA from a deceased spouse, you generally have two options. The first is you can elect to keep the IRA in the name of the decedent.
Is it better to roll an inherited IRA into your own account?
State income taxes will apply, too. You may be better off withdrawing money as you need it instead of cashing in the entire inherited IRA all at once. You can treat the IRA as your own by naming yourself as the account owner or by rolling the inherited IRA into your own IRA account.
Can a beneficiary of an inherited IRA take early distributions?
If you’re the beneficiary on their account, you may be able to take early distributions with no penalty or defer them until your spouse would have reached maximum retirement age. There are two primary types of IRAs you can inherit—a traditional IRA or a Roth IRA.
