Reading the finalized regs it seems to me that the estate of a spousal beneficiary could be in a worse position than non-spousal beneficiary in the event that the spouse beneficiary dies prior to the September 30th following the date of the death of the IRA owner.
As I read the regs for a non-spouse beneficiary you would simply use the deceased beneficiary's life expectancy(assuming that he or she had not died) for any distributions to the estate.
However for spouse beneficiaries you would use the life expectancy of the spouse's beneficiary desgnation. In situations where the spouse's death occured so soon after that of the IRA owner, it is unlikley that the spouse will have designated a beneficiary. Therefore you do not get the spouse's life expecantcy (based on the assumption that he or she did not die) but would be stuck with the 5 year rule.
Am I reading this correctly?