Usually, surviving spouses will rollover their deceased spouse’s retirement assets into their own account. However, it would be wise to consider a few other options before making a decision. From a tax perspective, taking a lump sum can be costly. If your life expectancy is high, the monthly benefit for life option is a good choice, especially if you are not comfortable with the market or do not plan on leaving a bequest. Also, an IRA transfer is possible depending on the plan documents, from there it will be treated as having belonged to you. Lastly, an inherited IRA might be a good choice if you are significantly younger than your deceased spouse.
See Dan Moisand, Inheriting a Retirement Account? Lump Sum Payouts Can be Costly, Market Watch, July 25, 2016.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
