When Should a Surviving Spouse Treat Themselves Like a Beneficiary?

October 25, 2019

Is a spouse ever “too young” or “too old” to inherit an IRA? The answer is likely "no," but there are a few things to consider when assisting a surviving spouse with IRA planning. Let’s discuss the "whys" of treating the spouse as the beneficiary of an IRA.

When a spouse inherits an IRA, he or she has the most options of all beneficiaries in how to inherit the account and take required minimum distributions (RMDs). Many spouses may want to treat the IRA as their own; however, some surviving spouses may find it beneficial to treat themselves like a beneficiary and elect an inherited IRA. Let’s take a deeper dive. 


Younger than Age 591/2

Just like a non-spousal beneficiary who can take distributions from an inherited IRA 10% penalty-tax-free (due to the death of the owner), a younger spouse would choose the inherited IRA for the same reason.

A spouse who is “too young” and needs the income can benefit from an inherited IRA because he/she:

  • Avoids the additional 10% tax on distributions. 
  • Can name his/her own beneficiary(s) who can stretch the IRA over his/her own life expectancy(s) should the surviving spouse die before taking RMDs (varies by carrier).
  • Is able to later roll the inherited IRA to his/her own IRA to stop mandatory distributions and recommence RMDs again at age 701/2.

Note: Rolling over to a traditional IRA can be a good way for a surviving spouse to: 

  • Name his/her own beneficiaries who can then stretch the IRA over his/her own life expectancy(s) (regardless of the age the surviving spouse dies).
  • Use the Uniform Life Table for lifetime distributions (rather than the Single Life Table for life expectancy distributions that would end by the time he/she reaches the late 80s, even though recalculated annually).


Older than IRA Owner Who Is Pre-RMD Age

A lesser-known strategy for a spouse who is older than a young (pre-age 701/2) decedent IRA owner can help delay RMDs past the surviving spouse’s age 701/2.

A spouse who is “too old” also may wish to use an inherited IRA to delay taking RMDs past age 701/2 to the Special Commencement date.

The Special Commencement date is 12/31 of the year the decedent would have turned age 701/2.  This alternate RMD date can only be used if both of the following are true: 

  • The decedent died before his/her required beginning date (4/1 of the year following attainment of age 701/2.)
  • The surviving spouse is the sole designated beneficiary.  

Although the general rule of thought upon the passing of an IRA owner may be to immediately change ownership to the surviving spouse, you should pause to consider the above strategy.  If the surviving spouse wants to delay RMDs as long as possible and has other assets to sustain his/her expenses, using the Special Commencement date should be considered. 

Note: The inherited IRA election cannot be used if the surviving spouse does either of the following:

  • Makes contributions to the account.
  • Fails to make an affirmative election to be treated as a beneficiary (varies by carrier).

All this to say that there may be more planning for a surviving spouse than may appear on the surface.

If you would like more information on this strategy, please contact the Retirement Strategies Group at (800) 722-2333 or email us at RSG@pacificlife.com



Picture of Caroline Elrod

Caroline Elrod is a Retirement Strategies Consultant with the Retirement Solutions Division at Pacific Life. She brings several years of industry experience to her role that includes tax planning with insurance products. Caroline enjoys educating financial professionals on creative and practical solutions to business, estate and retirement planning concerns.

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