Spousal Inherited Ira

The beneficiary of a spousal inherited IRA can do whatever he/she wants to with it. On the other hand, the non-spouse is very limited in what he/she can do with an inherited IRA, because the laws concerning the non-spousal inherited IRA is different than with the spousal inherited IRA.

The law allows the beneficiary, who is the decedent's spouse, it withdraw the money from the inherited IRA into an IRA plan in his/her own name. Conversely, the beneficiary, who is the non-spouse, cannot withdraw the money from an inherited IRA and put it into his/her own name.

The surviving spouse will have no problems transferring the IRA into his/her own name. The non-spouse, on the other hand, cannot transfer the inherited IRA into his/her own name either, even if the decedent put such instructions into his/her will.

The Pension Protection Act allows for the non-spouse to fill out paperwork to transfer the inherited IRA into another one which bears the name of the decedent. By making the transfer, the money building in the inherited IRA can keep growing.
The spouse inherited IRA also differs from the non-spousal inherited IRA in this way: the spouse can do a roll over on the IRA, and the non-spouse cannot. A roll over is when you can take the distribution finances and put it back into the IRA, so that it can keep growing.

Since the law restricts the non-spouse from having the same rights as the spouse concerning an inherited IRA, the IRA is not taxable. A non-spouse can do a Trustee-to-trustee transfer, which continues to keep the decedent's name on the IRA. The non-spouse must take the distribution payments, but cannot roll the payment back into the IRA.