Can I Leave My IRA To My Spouse?

Individual Retirements Accounts (IRAs and Roth IRAs) are tax advantaged. They can be a great way to build wealth. You may be wondering: Can I leave my IRA to my spouse as part of my estate plan? Not only is the answer “yes”—but recent changes to federal law make it more advantageous to do so. Here, our Norwood estate planning attorney explains the key things to know about leaving your IRA to your spouse in Massachusetts.

You Can Leave Your IRA to Your Spouse 

First and foremost, it is important to emphasize that you absolutely have the right to leave your IRA to your spouse. Indeed, designating your spouse as the primary beneficiary of your IRA in Massachusetts can offer significant advantages. By naming your spouse as the beneficiary, they can inherit the IRA directly. That means that the account can bypass probate. There is a smoother, more efficient transfer of the assets. Of course, you are certainly not required to leave your IRA to your spouse. There may be circumstances in which you prefer to leave an IRA to another beneficiary, such as your children. 

Spouse is Not Required to Make Early Withdrawals (Treat as Own or Step Into Your Shoes) 

IRAs are tax-advantaged retirement accounts. They can be subject to required minimum distributions (RMDs) depending on the age of the account holder. The Secure Act 2.0 is a federal law that, among other things, provides help to protect spouses who have inherited an IRA. A spouse who inherits an IRA can treat it as their own or they can step into your shoes. In other words, your spouse can defer required minimum distributions (RMDs) until they reach the applicable age. Under current law, the age of RMDs is 73. It will increase to 75 in 2033. In other words, your spouse is not compelled to take early withdrawals, preserving the account’s tax-deferred growth potential. Alternatively, they can choose to remain as the beneficiary of the account and take distributions. That may be advantageous depending on your spouse’s life expectancy and their financial situation.

The Best Way to Pass Down an IRA is Through a Properly Updated Beneficiary Designation 

Ensuring your IRA has an up-to-date beneficiary designation is crucial. Without a designated beneficiary, the IRA may become part of your estate—and that means that it could be subject to the Massachusetts probate process. Regularly reviewing and updating your beneficiary designations is a must—especially after major life events like marriage, divorce, or the birth of a child.

Note: You have the right to name multiple beneficiaries for your IRA. 

Call Our Massachusetts Estate Planning Attorney Today

At Fisher Law LLC, our Massachusetts estate planning lawyers are committed to helping people and families put the best structure in place for their financial future. If you have any questions about IRAs and estate planning, please call us  now or contact us online for a confidential consultation. We provide estate planning services in Norwood and throughout the Greater Boston area.

Source:

finance.senate.gov/download/retirement-section-by-section-