I really appreciate your prompt reply. Your concise information was exactly what I was looking for. Thanks again.
Hanneli

The way your IRA is currently set up, at your passing your husband, being the primary beneficiary, has a choice to either leave the IRA in your name and draw from it (when eligible), or to rollover the IRA into an account in his own name. If he does the second, he will be able to designate anyone he wishes as the primary beneficiary of that account. If he leaves the account in your name, at his passing the account would revert to the secondary beneficiaries that you’ve designated.

In the current setup you have no control over how he handles this. If you changed your IRA beneficiary to a trust, you could control how the funds from the IRA are ultimately distributed. This will require an attorney’s assistance to set up the trust as you wish.

Hope this helps -

jb

Thanks . Hanneli

Looking forward to your response.
Thanks. Hanneli

Warmest regards,
Mary

The primary benefit of leaving the IRA in his name at this point is that you can get at the funds without penalty. Since you’re under age 59.5, if you retitled the account to your name you would be subjecting yourself to a 10% penalty for early withdrawal.

There’s no law that says you can’t take out more than the minimum distribution requirements – if you need more, you should take more (but plan for the future).

Once you reach age 59.5 you could re-title the account in your name and name new beneficiaries, and continue to withdraw funds without penalty.

Hope this helps -

jb

The primary advantage to leaving the IRA in the name of the decedent spouse (i.e., treating it as an inherited IRA) is that if the surviving spouse is younger than age 59½, the inherited IRA provides for taking distributions without penalty. If the IRA is rolled over to an IRA in the name of the surviving spouse under age 59½, then regular distribution rules apply (10% penalty applies unless another exception is utilized). One particular downside to leaving the IRA as an inherited IRA is that RMDs are required from the account, regardless of the age of the beneficiary. (It should be noted that if RMDs are not taken from the spousal-inherited IRA or contributions are made, the IRS assumes that the IRA is being treated as your own, which is the same as rolling it over to a new account in your own name.)

The advantage of rolling over the inherited IRA to the name of the surviving spouse is that the surviving spouse can then name his or her own choices for beneficiaries; plus he or she can make contributions to the account from earnings. Lastly, by rolling over the inherited IRA to an IRA in the name of the surviving spouse, the surviving spouse has the option to convert the IRA (or a portion) to a Roth IRA.

Hope this helps!

jb

Yes, the distributions from the IRA (or 401(k)) maintain the same taxation privilege when inherited. That is to say, if distributions would have been taxable during the life of the original owner, distributions will be taxable to the beneficiary as well. This is true for spousal beneficiaries and non-spousal beneficiaries.

As an inherited IRA the distributions from the account are not subject to the 10% penalty, regardless of the age of the beneficiary… But if the account is rolled over or re-titled in the name of the spousal beneficiary, unless the spousal beneficiary is older than age 59 1/2 or one of the other exceptions applies, the 10% penalty will apply to distributions.

Hope this helps!

jb