Individual retirement accounts are so named because they attach to an individual owner. You can’t open a joint IRA. You generally cannot assign an IRA to another person. However, a couple of exceptions to this rule can result in a transfer of ownership.
In 2010, the Center for Disease Control surveyed U.S. marriage and divorce rates and found 6.8 percent of the population gets married every 12 months, while 3.6 percent gets divorced. If you divorce or enter into a separate maintenance decree, you may be required to turn your IRA over to your ex-spouse. If this occurs, the Internal Revenue Service will consider your IRA to now belong to your former spouse. If the entire proceeds are to be transferred to your ex-spouse, you can have the IRA custodian change the name on the IRA. If you get to keep a portion of your IRA, you can arrange a direct transfer of that portion to another IRA in your name before renaming the owner of the original IRA.
You may outlive your spouse and inherit your spouse's IRA. If your spouse made you the sole beneficiary of the IRA, you have several options on how to receive the IRA. You can take ownership of the IRA and have it retitled. Alternatively, you can roll the IRA into one you already own or accept the IRA as a beneficiary rather than as a spouse. In the latter case, you would have to distribute the IRA funds within five years of your spouse's death.
Required Minimum Distribution
The IRS requires you to take minimum distributions when you reach age 70 1/2. The size of the distribution depends on your life expectancy or the joint expectancy of you and your spouse. If you are the spouse and beneficiary of a deceased owner of a traditional IRA, use your age to determine the size of any required minimum distributions. This rule goes into effect in the year of the transfer. However, if you take ownership in the year your spouse dies, you can use your spouse's age at death to determine the required minimum distribution for that year.
When you inherit a Roth IRA, you can merge it with another Roth IRA you maintain. For this to work, your other Roth IRA must be one you inherited from the deceased -- yes, you can inherit multiple Roth IRAs from the same person -- or you must be the spouse of the deceased. The IRS doesn’t tax this type of transfer unless the deceased's Roth IRA existed for less than five years at the time of death. In this case, you must include any earnings from the inherited Roth IRA in your taxable income. However, this type of distribution doesn’t trigger the additional 10 percent early distribution tax, because it’s due to the death of the IRA owner.
Based in Greenville SC, Eric Bank has been writing business-related articles since 1985. He holds an M.B.A. from New York University and an M.S. in finance from DePaul University. You can see samples of his work at ericbank.com.