Know the Spousal Rules for Inherited Retirement Accounts
We have discussed the potential tax pitfalls of the Inherited Individual Retirement Account in previous stories. This is a fairly specialized situation that not every taxpayer will encounter. Moreover, although there are some fine accountants out there, we suspect that only selected practitioners have extensive experience dealing with inheritance of retirement accounts. We have told you how you can get into trouble with the Internal Revenue Service if you are not on the lookout for their rules. We have also mentioned that the rules apply differently depending upon the marital relationship between the person making the bequest and the person inheriting it. It turns out that when a wife or husband inherits the retirement account of his or her spouse, some interesting possibilities arise. For example, the spouse can roll the inheritance into her IRA. It seems that the person inheriting the retirement account can also add assets into what he has inherited, seemingly just at as if it were his own account.