The three options, side by side
Option 1: Roll it into your own IRA
The inherited account merges into your existing IRA (or a new one in your name). From then on it is simply your IRA: RMDs start at your required beginning age, calculated on the Uniform Lifetime Table. You can also make new contributions if you have earned income and otherwise qualify.
Best when: you are over 59 and 1/2 and do not need the money now. This maximizes the delay and simplifies everything into one account.
Option 2: Remain as beneficiary of the inherited IRA
You keep it titled as an inherited IRA. RMDs are based on your life expectancy from the Single Life Table, recalculated each year (spouses are the one beneficiary category that gets recalculation rather than the factor-minus-one method). RMDs do not start until the deceased spouse would have reached RMD age. Distributions while you remain as beneficiary are not hit with the 10% early-withdrawal penalty, even before 59 and 1/2.
Best when: you are under 59 and 1/2 and might need access to the money, or the deceased spouse was younger than you (which can delay RMDs beyond your own start age).
Option 3: Take a lump sum
Cash out the account. No RMD math at all, but the entire taxable balance lands as ordinary income in a single year, which can push you into a much higher bracket and trigger surcharges like IRMAA on Medicare premiums.
Best when: the balance is small enough that the tax hit is manageable, or you genuinely need the full amount now. Run the tax cost before choosing this.
Worked example: the math, step by step
The following is a hypothetical illustration with round numbers, comparing the RMD timing of the two main paths. It is not your situation and not advice; your actual factors come from the IRS tables based on your age.
Path A: remain as beneficiary. Because he was already past his required beginning date, your annual RMDs based on your own life expectancy begin the year after his death. Your Single Life Table factor at 68 is approximately 20.4, so your first full-year RMD is $420,000 ÷ 20.4 = $20,588.24. Each following year, you look up your new factor at your new age, rather than subtracting one.
Path B: roll into your own IRA. No RMDs until your required beginning age of 73. If the account is worth $460,000 when you turn 73, your first RMD on the Uniform Lifetime Table factor of 26.5 is $460,000 ÷ 26.5 = $17,358.49.
The trade-off in this example. Path B delays RMDs five years and starts with a smaller required amount, but once the money is in your own IRA, any withdrawal before you reach 59 and 1/2 faces the 10% penalty (not an issue at 68, but decisive for a younger widow or widower). Path A starts withdrawals immediately but preserves penalty-free access and uses your own life expectancy.
Arithmetic note: $460,000 ÷ 26.5 = $17,358.49 (26.5 × 17,358.49 = $460,000).
The decision, simplified
- Under 59 and 1/2 and might touch the money? Stay as beneficiary (Option 2) until 59 and 1/2, then roll it over. This preserves penalty-free access during the gap years.
- Over 59 and 1/2 and do not need it? Roll it into your own IRA (Option 1). Simplest, and RMDs follow your schedule.
- Spouse was younger than you? Compare carefully: remaining as beneficiary delays RMDs until they would have reached RMD age, which may beat your own start age. Run both numbers before deciding.
- Considering a lump sum? Estimate the single-year tax cost first, including state taxes and Medicare premium effects. It is rarely the best choice for a large balance.
Run the numbers for my situation
For the full treatment, including Roth IRA spousal rules and successor risk, see the in-depth guide: Inherited an IRA From Your Spouse? Your Three Options, and How to Choose.
Sources
- IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs)
- IRS RMD FAQs (Retirement plan and IRA required minimum distributions FAQs)
Frequently asked questions
What are a surviving spouse's options when inheriting an IRA?
Roll it into your own IRA, remain as beneficiary of the inherited IRA, or take a lump sum. The 10-year rule does not apply to spouses the way it does to non-spouse beneficiaries.
Should a spouse roll an inherited IRA into their own IRA or remain as beneficiary?
Over 59 and 1/2 and do not need the money: roll it over. Under 59 and 1/2 and might need access: remain as beneficiary to keep penalty-free access. If the deceased spouse was younger, remaining as beneficiary can also delay RMDs.
When do RMDs start if a spouse remains as beneficiary of the inherited IRA?
They are based on your own Single Life Table life expectancy, recalculated each year, and do not start until the deceased spouse would have reached RMD age.
Is there a 10% early-withdrawal penalty on an inherited IRA for a spouse?
No, not while you remain as beneficiary. The penalty protection disappears once you roll the account into your own IRA.
What happens if the deceased spouse had not taken their year-of-death RMD?
You must take it by December 31 of the year of death, regardless of which option you choose.
What happens when someone later inherits the IRA from the surviving spouse?
They are generally a successor beneficiary under the 10-year rule. Your choice now shapes their deadline, which matters for estate planning.
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