Traditional IRA ?

[jk70]

My MIL has an IRA and unfortunately she is close to passing. My FIL is the beneficiary of the IRA.

What route will the IRA go through when she passes? Is this considered an inherited IRA? Is there another route that is more beneficial?

[phil5185]

Is this considered an inherited IRA? Is there another route that is more beneficial?

No other route - the marriage partner inherits the spouse's IRA. After inheriting the IRA, there are choices on how to distribute it. If one/both are over age 70 1/2 there is a Required Minimum Distribution based on the new owners life expectancy charts. Or there is a 5-year choice to liquidate and pay the taxes. Fairly complex, so google it and study the section that applies to their ages.

[Savoir Faire-Demogague in NJ]

Phil is right on point... I will add that seeking out competent and professional tax advice would be a good idea.

[Plain Old Petunia]

A spouse has special status when it comes to inheriting IRAs. This is straight out of IRS Publication 17:


Inherited from spouse. If you inherit a traditional IRA from your spouse, you generally have the following three choices. You can:
Treat it as your own IRA by designating yourself as the account owner.

Treat it as your own by rolling it over into your IRA, or to the extent it is taxable, into a:

Qualified employer plan,

Qualified employee annuity plan (section 403(a) plan),

Tax-sheltered annuity plan (section 403(b) plan), or

Deferred compensation plan of a state or local government (section 457 plan).

Treat yourself as the beneficiary rather than treating the IRA as your own.

End of cut and paste.

www.irs.gov/publications/p17/ch17.html#en_US_2010_publink1000172688

ETA: I'm very sorry to hear your MIL is not well.