When an IRA is left to a spouse, the survivor can roll that account into an IRA of her own and new beneficiaries can be named. Often, such a rollover can lead to extended tax deferral for the survivor and the new beneficiaries. An unmarried couple living together does not have that option, though.
What can an unmarried co-habitant do with an inherited IRA?
* Take the cash. The IRA beneficiary will have access to the money in the account, after paying income tax.
* Disclaim. If the primary beneficiary files a disclaimer with the appropriate court within nine months of the IRA owner’s death, the account will pass to any contingent beneficiaries who have been named.
* Transfer the inherited account. An unmarried beneficiary may ask for a trustee-to-trustee transfer to an inherited IRA. This account must have both the former owner’s and the beneficiary’s name on it. Minimum distributions will be required but they can be stretched out over the beneficiary’s life expectancy at the time he or she inherited the account.
