One of the most consequential financial decisions in the first year of widowhood — and one with a hard deadline — is what to do with your husband's retirement accounts.
You have options that other beneficiaries do not. As a surviving spouse, you are entitled to treatment that is more favorable in significant ways than what non-spouse beneficiaries receive. Understanding your choices and their implications before making any decision is essential.
**Option 1: Roll over to your own IRA.** You can roll your husband's IRA (traditional or Roth) directly into your own IRA of the same type. This is generally the most advantageous option for most surviving spouses. The account becomes yours entirely — subject to your own RMD schedule, not his, and not subject to the ten-year rule that applies to non-spouse beneficiaries. You can continue contributing (up to annual limits if you have earned income) and the account grows on your timeline.
**Option 2: Treat it as an inherited IRA.** In some situations — particularly if you are younger than 59½ and may need to access the funds — treating the account as an inherited IRA has advantages. Withdrawals from an inherited IRA are not subject to the 10% early withdrawal penalty that applies to your own IRA before age 59½. This option preserves early access without penalty.
**Option 3: Take a lump-sum distribution.** This is almost always the least advisable option. The full amount is taxable as ordinary income in the year of distribution, potentially pushing you into a significantly higher bracket.
**The decision depends on:** your age, whether you need access to the funds before 59½, the account type (traditional versus Roth), and your overall tax situation.
This is a decision to make with a financial advisor and a CPA together — ideally before you take any action, because some choices are difficult or impossible to reverse.
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