Substantially Equal Payments For Spouse On Inherit

L1: Substantially Equal Payments For Spouse On InheritMy sister inherited the proceeds of her husband’s qualified profit sharing plan in 1996. In 1997 she rolled these proceeds over to an IRA in her own name. That year she set up a plan of substantially equal payments to avoid the 10% penalty tax on pre age 59 1/2 distributions. She is now 57 years old and would like access more money in her account for an emergency financial crisis.
I read recently, that there was an exception to the 10% penalty if the plan money was inherited and the money was rolled over to an IRA that was kept in the deceased spouse’s name with the surviving spouse as beneficiary.
My question: is it too late to recharacterize the IRA as belonging to the deceased spouse with the surviving spouse as beneficiary to take advantage of the exception? She was unaware that such an arrangement was possible at the time she established her own IRA from the inherited profit sharing plan.
Any clarification and guidance on this issue would be greatly appreciated.2005-06-07 12:22, By: Roy, IP: [65.101.16.208]

L2: Substantially Equal Payments For Spouse On InheritActually, according to my sources, the wife would only have avoided penalties if it had stayed in the profit-sharing plan with the deceased’s name and the spouse listed as beneficiary. Once the money was no longer in a Profit-Sharing Plan, the spouse has no way to move it back into benficiary status. Unfortunately, it has to stay in the IRA now, and will be subject to the usual IRA rules.2005-06-07 15:44, By: Daz, IP: [68.208.8.31]

L2: Substantially Equal Payments For Spouse On InheritI agree with Daz.
It was too late the day that she rolled the proceedsinto an IRA and retitled to her own name. Hopefully she has other sources of funds (or loans)that could be used for any emergency – she only has a few years left.
2005-06-07 15:52, By: gfw, IP: [172.16.1.71]