Our friends at DP Legal Solutions discuss how losing a spouse is one of life’s most difficult transitions. Amidst the grief, there are critical financial decisions that must be made, especially regarding retirement accounts. We provide the grounded, supportive advice you need during this time. As a surviving spouse, you have options that no other beneficiary has. A marriage green card lawyer can also help individuals understand how marital status and federal laws may impact broader legal rights. Contact an experienced lawyer today to discuss which path is right for your future.
The Spousal Rollover
The most common choice for a surviving spouse is to roll the deceased spouse’s IRA into their own new IRA. This allows you to treat the money as your own, delaying required distributions until you reach age 73 (or later, depending on future law). It also provides you with creditor protection and the ability to name your own beneficiaries.
Leaving the Money in the Deceased Spouse’s Account
There is one specific situation where it might be better not to do a rollover right away: if you are under age 591/2. If you roll the money into your own IRA and then need to withdraw it, you may face a 10% early withdrawal penalty. However, if you leave the money in your deceased spouse’s account (as an “inherited IRA”), you can typically take distributions penalty-free. You can always perform the rollover later once you reach 591/2.
New Rules for 2024 and Beyond
Recent changes in the law have given spouses even more flexibility:
- Wait Until Age 73: If your spouse died young, you don’t have to start taking distributions until the year they would have reached age 73.
- The Spousal Election: You can now elect to be treated as the deceased spouse for RMD purposes. This allows you to use more favorable “uniform lifetime tables,” resulting in smaller mandatory payouts and more money staying in the tax-deferred account.
Every situation is unique, and the “best” move depends on your age, your income needs, and your overall estate plan. We are here to help you make these choices with confidence. For a compassionate review of your options, contact an experienced lawyer today.