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My condolence's on your wife's loss.

There are normally 3 options, she may be down to 2. Option 1 is to establish a beneficiary IRA. If your mother-in-law died in 2001, your wife can withdraw funds from the IRA over her expected lifetime using the MRD tables -- but she must begin the distributions this year.

If she died before 2001, there are only 2 options left -- either take the full distribution now, or place the funds in a beneficiary IRA and take the distribution before the end of the 5th calendar year after death.

In any event, distributions will be taxed at your current tax rate. If the distributions are substantial, you could find yourself in a higher tax bracket as a result.

Finally, if your mother-in-law's estate was subject to Estate Tax, you may be able to get a credit for some of the estate tax paid against the IRA income.

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