What is true if the owner of an IRA names their spouse as the beneficiary but dies before any distributions are made?

When an individual who has an IRA names their spouse as the beneficiary, and they pass away before any distributions have been made, the surviving spouse has the option to roll the account into their own IRA. This means that the spouse can treat the inherited IRA as their own, which allows for continued tax-deferred growth of the account. This option is advantageous because it preserves the tax benefits associated with the IRA, allowing the surviving spouse to maintain their retirement savings.

The flexibility of rolling the account into the surviving spouse's IRA means they can choose to defer distributions until they are required (typically at age 72), rather than being forced to take distributions from an inherited account, which has different rules. This ability to combine the accounts can greatly benefit the financial situation of the surviving spouse, providing them with more control over their retirement funds.

The other options do not accurately reflect the rights of the surviving spouse in this scenario. The account does not need to be closed, and its value is not lost or transferred to the state; instead, it remains an asset that can be managed and utilized by the surviving spouse.