Basic RMD Rules: If a spouse inherits an IRA from a spouse who died after his required beginning date [which is April 1 of the year that follows the year in which he attained age 70 ½] the inheriting spouse [let’s call her wife or the survivor] must take the required minimum distribution [RMD] for the year of death if her deceased husband had not already taken his RMD for that calendar year.

  • The RMD can be taken either from the survivor’s inherited IRA, if she chooses to retain her deceased husband’s IRA as an inherited IRA; or
  • If the survivor elects to do a spousal rollover by transferring the funds to the survivor’s own rollover IRA, the decedent’s RMD can be taken from the survivor’s own rollover IRA.

The IRS does not really care where the distribution is taken from, just so long as the RMD is taken during the calendar year so it can be taxed.

Note that if the IRA owned by the decedent spouse is a Roth IRA, or the deceased spouse died before he reached his RBD, then there is no obligation to take any RMD during the year of death. Other distribution rules then kick in.

Off Topic Question: Why would a surviving spouse ever continue with an inherited IRA from her deceased spouse, and not promptly do a rollover into her own rollover IRA? The easy answer is that the distribution rules are different for an inherited IRA and rollover IRA. The distribution rules are also different for surviving spouse beneficiaries of inherited IRAs than for non-spouse beneficiaries. The challenge is keeping these different distribution rules straight, or more accurately, not commingling them.

Example: Some important distinctions between these inherited and rollover IRAs distribution rules are summarized below. It is helpful to use an example to understand these distinctions.  Assumed facts: Husband, who was employed, age 60, dies. He is survived by a wife age 50 years. The decision for the wife is either to continue her husband’s IRA as an inherited IRA or promptly transfer her late husband’s IRA assets into a rollover IRA in wife’s name alone. What goes into that decision follows:

  • Delayed RMDs: Unlike non-spouse beneficiaries of an inherited IRA who must start taking RMDs the year following the year of the IRA owner’s death, a surviving spouse who chooses to keep the inherited IRA [i.e. there is no rollover by her] is not subject to taking any RMDs until the later of (i) December 31 of the year following her husband’s death; or (ii) December 31 of the year her late husband would have been 70 ½ years of age. Thus,  if the husband died at age 60, his wife can wait another 10 years before she must start taking RMDs from the inherited IRA– when her husband would have reached age 70 1/2. That would not be the case if the husband had named his children as his IRA beneficiaries- the children would have to start taking taxable RMD distributions from their father’s inherited IRA beginning the year after their father’s death.
  • 10% Penalty: As the wife is relatively young  she may need to start to withdraw funds from the IRA to support herself having lost access to her late husband’s income. In that case, an inherited IRA would be a better choice for wife than a rollover IRA. That is because there is no 10% penalty imposed on distributions from an inherited IRA. If the wife transfers her late husband’s IRA into her own rollover IRA, and she later finds that she needs to pull money from her own rollover IRA to support herself, any withdrawals from her own rollover IRA will be subject to the 10% early withdrawal penalty. In contrast, if the wife retained her late husband’s IRA as an inherited IRA, and she needs funds later on,  she can withdraw funds from the inherited IRA without any penalty. And, as noted above, if the wife does not need to access any of the IRA in order to support herself, unlike non-spousal beneficiaries, the wife is not obligated to take any RMD’s from her inherited IRA until her late husband would have reached age 70 ½. Wife thus has more flexibility with an inherited IRA than with a rollover IRA to avoid the 10% penalty.
  • Rollover at Any Time: There is even more flexibility afforded to a surviving spouse if she opts to continue with her late husband’s inherited IRA. If the wife continues with the inherited IRA she can withdraw funds, as needed, without fear of triggering a 10% early withdrawal penalty. Or, she does not have to take any RMD if she does not need the money. Moreover, unlike a non-spouse beneficiary of an inherited IRA, the wife can convert the inherited IRA to a rollover IRA at any time.  Presumably the wife would wait until after she passed age 59 ½ before she implemented the transfer to her own rollover IRA in order to no longer be exposed to the 10% early withdrawal penalty if she later needed money from her own rollover IRA.
  • Annually recalculate Life Expectancy: Unlike non-spouse beneficiaries of an inherited IRA, if the wife chooses to continue with her late husband’s inherited IRA she may at some point be subject to RMD’s, such as when her late husband would have attained age 70 ½. But the wife is permitted to recalculate her life expectancy each year when she determines the RMD that she must take for that year from the inherited IRA, while non-spouse beneficiaries of inherited IRAs are never permitted to recalculate their life expectancies. This annual recalculation of life expectancy by the wife will result in a smaller RMD for the calendar year if she is faced with having to take an RMD from the inherited IRA. Avoiding exposure to this RMD obligation might be another reason that causes the wife to transfer the assets from her late husband’s inherited IRA to her own rollover IRA,e. when her late husband would have reached age 70 ½, even if she has not yet reached at 59 ½ when her exposure to the 10% early distribution penalty finally disappears. The  taxable RMD amount that wife faces may not be as large as first thought due to the shifting life expectancy used for the calculation.
  • Joint Life Expectancies: Finally, admittedly another small point which leads to a different RMD amount calculation,  is that any RMD taken from an inherited IRA is calculated using a single life expectancy, i.e. the beneficiary’s actual life expectancy. If a transfer of the inherited IRA assets is made by the wife to a rollover IRA, then the wife’s RMD from  her own rollover IRA is computed using a hypothetical joint life expectancy (with someone presumed to be 10 years younger than her), which translates into a smaller RMD amount that the wife must take from her rollover IRA. In short, when wife runs the calculations for her RMD, she needs to use different  IRS life expectancy tables to compare the RMDs taken from an inherited IRA and from her own rollover IRA.

Forced Distribution Trap:  While these distribution rules tend to show that a surviving spouse might actually benefit from continuing with an inherited IRA for a period of time after her husband’s death if she is fairly young, or her husband died at an early age,  it is important to keep in mind that the Supreme Court (Bobrow) held a couple of years ago that unlike a regular IRA, or in our case a rollover IRA,  which is protected from creditor claims in bankruptcy (or under Michigan’s exempt property statutes which protect IRAs) an interest held by the surviving spouse in an inherited IRA is not protected in bankruptcy. Only a few states have passed statutes that protect an inherited IRA from creditor claims, but Michigan is not one of them. Accordingly, while there can be some benefits to consider if a surviving spouse opts to continue with an inherited IRA,  there are also some traps if creditor protection is important to the surviving spouse.


  1. It is wise to ‘go slow’ when a spouse dies and the survivor thinks he/she needs to immediately perform a spousal There is a lot of flexibility built-into an inherited IRA, and if the deceased spouse was relatively young, like in the above example, there may be no obligation to take an RMD for many years.
  2. Once a spousal rollover IRA occurs, it is irrevocable. No do-overs are allowed. This is yet another reason to ‘go slow’ when making a decision if a spousal IRA rollover is the best planning strategy for the surviving spouse.
  3. A survivor’s young age and need for income can dictate if an inherited IRA is a better choice, especially if there is a desire to avoid the 10% early withdrawal penalty for distributions from one’s own IRA.
  4. A survivor can convert an inherited IRA to a rollover IRA at any time, but it will probably be after the survivor attains age 59 ½ (when she no longer subject to the 10% early withdrawal penalty) or when the survivor’s late husband would have attained at 70 ½ ( when RMDs must begin to be taken by the widow.)
  5. RMDs are calculated differently for surviving spouses than for non-spousal beneficiaries of inherited IRAs. The RMD’s that a surviving spouse must take from an inherited IRA may be much smaller than originally thought to be the case.
  6. Don’t forget to factor into the rollover decision creditor protection concerns for the surviving spouse. Despite all of the perceived benefits with continuing an inherited IRA for a period of time, if the surviving spouse has creditor concerns that won’t go away, it may make more sense to move forward with a spousal rollover IRA which should be protected from creditor claims in bankruptcy or Michigan’s exempt property statutes.