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inheriting two IRA accounts from the same spouse


Ron Torgesen
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This is an estate planning question.  I am well past the age of 59.5 while my wife is well under.  So, I am trying to develop an optimal strategy for her in case I die before she reaches 59.5.  I have an IRA and a Roth IRA; she has just a Roth.  My idea is that I should very soon divide my IRA into two IRA accounts at the same brokerage house.  Then when she inherits, she can take my Roth as her own, one IRA as her own, and one IRA as a beneficiary.  She will be able to take distributions from the beneficiary IRA account without penalty, because the taxation rules that applied to me will continue to apply to that account.  The downside is that she will have to drain that account within ten years.  The assets in the IRA she inherits as owner will not be available to her without penalty until she reaches 59.5, but she would not have to drain the account within any time period.  If she needs more income than the Inherited IRA provides she can withdraw from her Roth which now holds the combined assets from both our Roth accounts without tax and without penalty.  

Once I have divided my IRA into two IRA accounts we would shift assets between them annually to try to assure that the IRA that will become her Inherited IRA has enough assets in it.  

Would this work?

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I  think you should talk to an estate planning attorney and/or financial planner versed in the nuances.

But overall yes your idea can work if she has need to access the funds prior to age 59.5 without the 10% penalty.

One thing with respect to the Spousal Inherited IRA, she does not need to drain it 10 years. The ability to do a "stretch IRA" as the term was used prior to SECURE is still available for spousal inherited IRAs.

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My understanding of the Spousal Assumption Rules was that she could do spousal assumption at anytime (but once it's done, it's done). So say she's 52 years old when you pass. She can identify the IRA as a Beneficiary IRA and take the funds out according w/o the 10% penalty. Once she obtains the age 59.5, whatever is left in the Beneficiary IRA, she can claim as a Spousal Assumption and make it her own IRA. Somebody can correct me if I'm wrong. But in this scenario, there would be no need for 2 separate IRAs. The only drawback would be the annual required distribution would be more because the value of the IRA.

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Yes, I have realized that a simpler setup can achieve my goals.  So, now the plan is:

If she inherits prior to her age of 59.5 then:

             take my IRA as an Inherited IRA

             take my Roth as her own Roth

She can withdraw from the now combined Roth up to her total Roth Basis without tax or penalty as needed.

Then on reaching 59.5 she should take the remainder of the Inherited IRA as a Spousal Assumption.

If she inherits after age 59.5 then she should

             take my IRA as her own IRA

             take my Roth as her own Roth

Thanks for the suggestions.

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Here's another question that has come up.  As far as I know the SSA does not know that my wife and I have been married for a long time.  There is no reference to her on my ssa.gov account.  So, does that mean that it will only be when she applies either for spousal or survivor's benefits on my record that she will present a marriage certificate to show that she's my wife?  Seems dicey.  Marriage certificates don't have social security numbers.

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