Retirement Planning/Retirement Plans


I'm a retired male 73 yoa with a 401(k) and my wife is retired (66 yoa) with an IRA. Upon death, the surviving spouse will get the money. How is this transfer handled? Like an insurance payment or as a transfer of funds that could be spent and/or reinvested? Any tax payments due, and if so, could taxes be mitigated with a special arrangement?

Dear Andrew,

Spouse to spouse transfers become the legitimate tax-deferred accounts of the surviving spouse. The resulting account is treated the same as it was by the original owner of the account.

A side comment: If you have not already done so, I believe that it is in your best interest to roll your 401(k) directly into an IRA. Keeping these funds under the control of your former employers' 401(k) administrator creates a degree of risk that you do not need.

As long as the funds remain in qualified accounts, whether held by the original owner or the surviving spouse, taxes would only be generated by the distributions taken from them. However, once an account holder reaches age 70, taking out less than the Required Minimum Distribution will result in a penalty of half of the difference between the amount taken and what should have been taken.

If you wish, you can e-mail me at with specifics about your plans, and I can make more detailed suggestions that might enhance each accounts value.

Willard R. Brumbaugh, LUTCF
CA License 0374776
(888) 792-2379

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Willard R. Brumbaugh, LUTCF


I have answered many questions regarding 401ks, IRAs and annuities as well as life insurance. I have been counselling against most Qualified Plans since 1994.


Ranked in the top 5 in retirement catagories at most of its last 2 1/2 years. Organizations I belong to: National Association of Insurance and Financial Advisors-California
Inland Empire Estate Planning Council

Life Underwriters Training Council Fellow

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