Investment Company and Variable Contracts Products Representative (Series 6)Practice Exam

What happens to a deceased spouse's IRA assets upon death?

1. They are lost

2. They may be combined with the surviving spouse's IRA

3. They must be distributed immediately

4. They cannot be transferred

The correct answer is: They may be combined with the surviving spouse's IRA

When a spouse passes away, the assets held in their Individual Retirement Account (IRA) can typically be transferred or rolled over to the surviving spouse's IRA. This option allows the surviving spouse to retain the tax-deferred status of the funds, which can be beneficial for long-term financial planning and growth. It enables the surviving spouse to continue to manage the assets as part of their own retirement savings without incurring immediate tax liabilities that could occur with an outright distribution. Transferring or combining the deceased spouse’s IRA with the surviving spouse’s IRA also offers more flexibility in terms of how and when the funds can be accessed in retirement. This provision helps to ensure that the surviving spouse can benefit from the full potential of the retirement savings, thus supporting financial stability during a potentially difficult time. This choice aligns with regulations surrounding IRAs, which generally permit spousal rollovers, thereby facilitating continuity in retirement planning for the surviving partner.