At Greenway Financial Planning, we understand that losing a spouse is one of life’s most profound challenges. Amidst the emotional weight, you may face complex financial decisions, such as what to do with your deceased spouse’s Traditional IRA. Our goal is to guide you with clarity and compassion, helping you make informed choices. As Proverbs 3:5-6 reminds us, “Trust in the Lord with all your heart and lean not on your own understanding; in all your ways submit to Him, and He will make your paths straight.” Let’s explore your options with wisdom and care.
Understanding Your Options for a Traditional IRA
When inheriting your spouse’s Traditional IRA, the first step is determining whether they were the original owner of the account. If your spouse inherited the IRA from someone else (a “twice-inherited” IRA), specific distribution rules apply, and we can help you navigate those requirements. In most cases, however, your spouse is likely the original owner, and your decisions will depend on factors like your age, income needs, and financial goals.
Key Considerations for Distributions
If your spouse hadn’t satisfied their Required Minimum Distribution (RMD) for the current year, you must take the remaining RMD amount by year-end to comply with IRS rules. As a surviving spouse, you’re typically an Eligible Designated Beneficiary, meaning RMDs are calculated based on your life expectancy using the IRS Single Life Table. These distributions must begin the later of:
- The year after your spouse’s passing, or
- The year your spouse would have been required to start taking RMDs.
If you’re 59½ or older and older than your deceased spouse, or if you don’t need immediate income, you have the flexibility to roll the IRA into your own IRA. This option can simplify your financial planning and defer distributions until your own RMD age. As Ecclesiastes 3:1 teaches, “There is a time for everything, and a season for every activity under the heavens.” Taking time to assess your needs can ensure your decision aligns with your long-term goals.
When Income Is Needed
If you’re younger than 59½ and need income from the IRA, you can take distributions as an Eligible Designated Beneficiary without incurring the 10% early withdrawal penalty. These distributions will still be subject to income tax, but they can provide financial support during a transitional season. You can also roll the IRA into your own account later when your circumstances change. Psalm 37:4 encourages us, “Take delight in the Lord, and He will give you the desires of your heart.” Seeking wise counsel can help you balance immediate needs with future security.
Why Choose Greenway Financial Planning?
Navigating inherited IRAs can feel overwhelming, but you don’t have to walk this path alone. At Greenway Financial Planning, we’re committed to providing personalized guidance rooted in integrity. Our team, led by Luke McCord, is here to help you understand your options and make decisions that honor your financial and personal values. As registered investment advisers in Georgia, we prioritize transparency and encourage you to compare our reports with your custodian’s statements to ensure accuracy.
If your financial situation or goals change, contact us at 678-341-0186 or luke@greenwayfinancialplanning.com. As Matthew 6:33 advises, “Seek first His kingdom and His righteousness, and all these things will be given to you as well.” Let us help you seek clarity and peace in your financial journey.