When inheriting an IRA, a surviving spouse has several options. He or she can remain the beneficiary of the account. As an alternative, if the spouse is the sole beneficiary, he or she can instead treat the inherited IRA as his or her own.

If there are multiple beneficiaries, the account can be divided up so the spouse’s share is in its own account. When a spouse makes this decision, the IRA is simply retitled in his or her name. Since the account is then considered the spouse’s, he or she can then name new beneficiaries.

But be careful: Generally, withdrawals are subject to a 10 percent federal income tax penalty if the spouse has not reached age 59^1/2. In addition, there can be penalties if the spouse does not take required withdrawals at the proper time. For example, the first required minimum distribution must be taken by the spouse by April 1 of the year after he or she turns 70^1/2. In other words, if the surviving spouse turns 70^1/2 this year, the minimum distributions must start by April 1 of next year.