'For ExxonMobil employees, regularly reviewing IRA beneficiary designations and understanding how spousal beneficiary decisions may influence future distributions can be an important part of aligning retirement assets with long-term family goals,' – Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement Group. 

'Many ExxonMobil employees focus on building retirement savings throughout their careers, but understanding how beneficiary elections and inherited IRA rules may affect the transfer of those assets to future generations is an equally important part of the planning process,' – Patrick Ray, a representative of The Retirement Group, a division of Wealth Enhancement Group.

In this article we will discuss:

1. How different spousal IRA beneficiary options can affect your children's inheritance.

2. The tax and required minimum distribution (RMD) consequences of each available option.

3. Key planning considerations that may help align your IRA beneficiary strategy with your family's long-term goals.

If you are one of the many ExxonMobil employees with an IRA, you have probably named your spouse as your primary beneficiary. That is a practical decision because it allows your surviving spouse access to the account while they are alive.

Many families do not realize that the decision a surviving spouse makes about an inherited IRA can affect how long their children have to withdraw the remaining assets. That, in turn, can affect how long the account continues to benefit from tax-deferred growth.

An important planning reminder is that if you want your children to inherit the IRA after your spouse, your spouse should designate them as the beneficiary of the inherited account. This applies whether your spouse keeps the account as an inherited IRA or transfers it into their own IRA. Otherwise, the IRA custodian's default beneficiary provisions may determine who inherits the account, and those provisions may not reflect your family's wishes.

The Options and Outcomes of a Spousal IRA

Suppose you plan to name your spouse as the beneficiary of your IRA, and your spouse intends for your children to inherit the account someday. The tax-deferral outcome can depend on how your spouse chooses to handle the inherited IRA and when that decision is made.

Option A: Transfer the Inherited IRA Into Your Spouse's Own IRA

When your spouse transfers the inherited IRA into their own IRA, the account is generally treated as though it had always belonged to them.

As a result, the IRA becomes subject to the same rules that apply to your spouse's own retirement account. Depending on their year of birth, they generally are not required to begin required minimum distributions until age 73 or 75. In addition, unless an exception applies, withdrawals taken before age 59½ may be subject to the 10% additional tax.

After your spouse passes away, your children will generally have ten years to distribute the inherited IRA.

If your spouse dies before reaching the age at which required minimum distributions would have begun, the ten-year rule generally applies without annual required minimum distributions.

If your spouse dies on or after the age at which required minimum distributions would have begun, the ten-year rule still applies. However, your children generally must also take annual required minimum distributions during that ten-year period, typically calculated using the beneficiary's single life expectancy.

This distinction applies only to traditional IRAs because Roth IRA owners are not subject to lifetime required minimum distributions.

In general, your spouse may transfer the inherited IRA into their own IRA at any time. Although there is no federal deadline for making this election, the timing may affect which withdrawal rules apply.

Option B: Keep the Assets in an Inherited IRA

Instead of transferring the assets into their own IRA, your spouse may decide to keep the account as an inherited IRA.

In that situation:

- If you pass away before the age at which required minimum distributions would have begun, distributions are generally based on your spouse's single life expectancy. Those required distributions typically begin no later than the year you would have reached the applicable required beginning age.

- If you pass away on or after the age at which required minimum distributions would have begun, distributions are generally based on the longer of your remaining single life expectancy or your spouse's single life expectancy. Those distributions usually begin in the year following your death.

- After your spouse later passes away, your children generally continue taking annual distributions based on your spouse's remaining single life expectancy while also complying with the ten-year payout rule. Depending on the remaining life expectancy, the account may be depleted before ten years have passed.

Example 1: Mark Passes Away Before His Required Beginning Date

In this example:

• - Mark dies at age 70.

• - Rather than transferring the account into her own IRA, his wife, Lisa, keeps it as an inherited IRA.

• - Lisa begins taking required distributions no later than the year Mark would have reached the applicable required beginning age. Those distributions are based on her single life expectancy.

• - After Lisa passes away, their children generally continue annual distributions based on Lisa's remaining life expectancy while distributing the remaining IRA within ten years.

Example 2: Mark Passes Away After His Required Beginning Date

In this example:

• - Mark dies at age 78.

• - Lisa keeps the account as an inherited IRA.

• - Lisa begins taking distributions the year after Mark's death using the longer of her single life expectancy or Mark's remaining single life expectancy.

• - After Lisa passes away, their children continue annual distributions based on the life expectancy schedule she was using, while the account generally must be fully distributed within ten years. Depending on the remaining life expectancy, the account may be exhausted sooner.

Option C: Disclaim the IRA

Your spouse may decide to formally disclaim the inherited IRA for tax or estate planning reasons, allowing the account to pass directly to your children.

In that situation, the inherited IRA generally passes to your children under the ten-year distribution rule.

If you passed away before the age at which required minimum distributions would have begun, the ten-year rule generally applies without annual required minimum distributions. If you passed away on or after the required beginning date, annual required minimum distributions generally apply during the ten-year period.

Your children will inherit the IRA after your spouse's disclaimer only if your beneficiary designation permits that outcome. Your spouse should work with an estate planning attorney to help confirm that any disclaimer complies with applicable federal and state law, as well as the IRA custodian's requirements.

Why These IRA Decisions Matter

At first glance, these options may appear similar. In every scenario, your spouse initially inherits the assets, and any remaining balance may eventually pass to your children after your spouse's death or disclaimer.

However, the required distribution schedules and withdrawal deadlines can differ significantly depending on which option is selected. Those differences can affect how long the assets remain invested on a tax-deferred basis.

If your IRA balance is substantial, these choices could have meaningful financial and tax consequences.

Factors Your Spouse's Advisor Should Consider

When evaluating which option may be most appropriate, your spouse's advisor should consider several important factors, including:

• - Your age at death

• - Your spouse's age

• - Your children's ages

• - Whether your spouse expects to rely on IRA withdrawals to meet living expenses

These factors generally influence the amount that must be withdrawn each year under the applicable distribution rules. Considering them carefully may help support your family's long-term planning goals.

The Retirement Group Can Help ExxonMobil Employees

Understanding inherited IRA rules and beneficiary options can be challenging. If you have questions about how these rules may fit into your retirement strategy, The Retirement Group can help you evaluate your options while working alongside your tax and legal professionals. Call The Retirement Group at (800) 900-5867 to speak with a retirement planning professional.

Planning Ahead Can Help Support Your Goals

For many families, retirement savings represent one of their most valuable assets. Taking the time to understand the available beneficiary options can help your assets continue supporting your family's long-term objectives after the death of a spouse.

Because your surviving spouse will ultimately make many of the decisions discussed in this article, it is important to communicate your wishes while you are both living and review your beneficiary designations periodically.

Please remember that this article provides only a high-level overview of inherited IRA rules. The options available to your spouse and beneficiaries may differ depending on your individual circumstances, including whether your beneficiaries qualify as eligible designated beneficiaries under current law.

Finally, if your goal is for your children to inherit your IRA, but you are unsure whether your beneficiary designations accomplish that objective, consider speaking with an estate planning attorney to help confirm that your assets are distributed according to your wishes.

Sources:

1. Barron's. 'You Inherited an IRA. Here's How to Avoid a Huge Tax Bill.'  Barron's , 2024,  https://www.barrons.com/articles/inherited-ira-avoid-huge-tax-bill-c7e9d4a1 . Accessed 28 June 2026.

2. Internal Revenue Service.  Publication 590-B: Distributions from Individual Retirement Arrangements (IRAs).  U.S. Department of the Treasury, 2025,  https://www.irs.gov/publications/p590b . Accessed 28 June 2026.

3. Internal Revenue Service. 'Retirement Topics – Beneficiary.'  Internal Revenue Service , U.S. Department of the Treasury, updated 2025,  https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary . Accessed 28 June 2026.

4. Internal Revenue Service. 'Retirement Topics – Required Minimum Distributions (RMDs).'  Internal Revenue Service , U.S. Department of the Treasury, updated 2026,  https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds . Accessed 28 June 2026.

5. Kiplinger. 'Inherited an IRA? Don't Fall Into the 10-Year Tax Trap.'  Kiplinger , Feb. 2026,  https://www.kiplinger.com/retirement/inheritance/inherited-ira-how-to-avoid-a-tax-trap . Accessed 28 June 2026.