Inherited IRA or Spousal Rollover? The Decision Every Surviving Spouse Must Make

When a client loses a spouse, navigating inherited IRA options is one of the most critical decisions they’ll face.

While non-spouse beneficiaries are generally locked into the strict 10-Year Rule under the SECURE Act, surviving spouses hold a unique set of flexible rules.

Choosing the right path comes down to balancing immediate liquidity needs against long-term tax deferral.

Here is a simple breakdown of the two primary strategies for a surviving spouse:

1️⃣ Option 1: Maintain as an Inherited IRA (Beneficiary IRA)
The Strategy: Keep the account registered in the deceased spouse’s name for the benefit of (FBO) the surviving spouse.
Best For: Spouses under age 59½ who need access to the funds.
Key Advantage: Withdrawals are exempt from the 10% early distribution penalty. Required Minimum Distributions (RMDs) can also be delayed until the year the deceased spouse would have reached RMD age.

2️⃣ Option 2: Spousal Rollover (Assume Ownership)
The Strategy: Transfer the assets directly into the surviving spouse’s own existing or newly created IRA.
Best For: Spouses over age 59½, or those under 59½ who have sufficient outside cash flow and won’t need to touch the funds early.
Key Advantage: Maximizes long-term tax deferral by postponing RMDs until the surviving spouse reaches their own RMD age (73/75) and uses the more favorable Uniform Lifetime Table.

Pro Tip: These options aren’t mutually exclusive over time. A surviving spouse under 59½ can maintain the account as an Inherited IRA to take penalty-free distributions as needed, then execute a Spousal Rollover after turning 59½ to maximize future tax deferral. ⏳

Please contact the local agent of TransGlobal today or call 888-831-8868.

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This article is for informational purposes only and should not be construed as financial advice or legal advice. Please consult with a professional to develop a strategy that is right for you. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. TransGlobal Advisory, LLC (TGA) does not provide legal, tax, or accounting advice. You should consult your personal tax or legal advisor before making any financial decisions.