Retire Safe & Tax Free - Spousal Beneficiaries: Treat As Your Own Option for IRAs


Is it important to distinguish between a beneficiary and a spousal beneficiary of an IRA?

Yes, it is! Spousal beneficiaries have unique options such as the "treat as your own" option that is not available to non-spouse beneficiaries.

Unlike other beneficiaries, a spousal beneficiary may choose to treat an IRA inherited from a deceased spouse as his or her own IRA. This option is only available to a surviving spouse who is the sole primary beneficiary. If there happens to be an additional designated primary beneficiary (i.e., a child or grandchild), the same result can be achieved by transferring the surviving spouse’s portion of the IRA to his or her own IRA.

This "treat as your own" option can be accomplished by re-titling the deceased spouse's IRA or simply transferring the IRA balance to the surviving spouse's own IRA. A surviving spouse may also be deemed as having elected to treat the IRA as his or her own if he or she fails to take RMDs as a beneficiary within the applicable deadline or if the surviving spouse makes contributions to the IRA.

It is important to keep in mind that IRA custodial agreements (the rules established by the financial institution holding your monies) vary and the custodial documents will indicate the distribution options available to your beneficiaries. The IRA custodian will also have its own re-titling procedures and other distribution steps that need to be followed.

The option to treat an IRA you inherit from your spouse as your own may be invoked at any time even if you initially started taking RMDs as a regular IRA beneficiary. However, it is a one-time election and it is irrevocable.

Marc H. Weiss, Archer Weiss Insurance & Financial Services, Inc. Please Call Toll free: 1-800-831-2901 or (818) 610-8560