morbid question about IRAs

[greenbunny]

DH and I do not have the money to max out both our IRAs this year due to buying a house. We've discussed whether we should just combine our money and max out his account since he's two years older than me, and therefore will be able to access his account first.

If for some reason DH dies before he is old enough to access his IRA, can I access that money on the date that he would have been old enough, or do I have to wait until the date I turn old enough--meaning his and mine would be accessible to me at the same time?

Unfortunately, there is serious heart disease in his family, and many of the men die in their mid-fifties, so this is a real concern for us. :(

[paiger]

I found this:

Spouses

Though it may be the case that really understanding your spouse is one of life's greater challenges, understanding the tax effects of making your spouse a beneficiary of a your traditional IRA is actually pretty simple. A widow may treat a departed spouse's IRA as her own. (The rules apply equally regardless of whether we're talking about widows or widowers here.) As a widow, she may roll her husband's IRA to her own IRA and continue the tax deferral. Easy enough.

Non-Spousal Beneficiaries

All other beneficiaries must take and be taxed on a distribution from an inherited traditional IRA. In essence, non-spousal beneficiaries have two choices on how to take distributions.

1) The Lump Sum: No later than December 31 of the fifth year following the IRA owner's death, non-spousal beneficiaries may cash in the IRA without penalty, pay ordinary income taxes, and keep what's left. This distribution procedure is known as "the 5-year rule."

2) Little by little: Non-spousal beneficiaries may have the IRA proceeds paid out over their own life expectancies and pay ordinary income taxes on the amount distributed each year. The election to have the IRA distributed over their lifetimes must be made and implemented no later than December 31 of the year following the year of the IRA owner's death. If the election is not made by that date (and, hey, that's more than a full year to decide), then all the proceeds must be withdrawn and taxed using the 5-year rule discussed above.

So, it looks like obviously the money is yours, but the same rules for distribution still apply unless it is non-spousal beneficiaries. I think that early withdrawal w/o penalty is just for educational expenses and maybe that 1st time home buyer thing.