If a spouse treats an inherited IRA as her own, what happens to its character?

When a spouse treats an inherited IRA as her own, the account retains its character as an inherited IRA. This means that the special rules applicable to inherited IRAs continue to persist. One key aspect of an inherited IRA is that the original account holder's age and time of death significantly influence how distributions are handled, which won't change simply because the spouse has opted to treat it as their own.

In this situation, although the spouse is now managing the account, the tax implications and distribution requirements of the inherited IRA remain in effect. For example, required minimum distributions (RMDs) could be influenced by the original account holder's age and life expectancy, which are essential factors that govern distribution timelines and amounts. Therefore, by treating it as her own, she is acknowledging her authority over the account while also accepting the inherited character of the assets within it.

The other choices suggest various changes to the account's nature or requirements that do not reflect the rules governing inherited IRAs. For example, classifying it as a joint asset or converting it into a non-taxable account would alter the fundamental nature of the IRA, which is not permissible under IRS regulations regarding inherited assets. Additionally, the notion that the account must be liquidated contradicts the options available to