@NCperson
@VolvoGirl is correct, in the case of a spouse, there is a third option, to rollover the account into the spouse's IRA so it becomes the spouse's IRA instead of a separate inherited IRA. I think your examples are a bit confusing. There are 3 options.
1. Designate yourself as the owner (i.e. spouse becomes the owner but keeps the account separate)
2. Rollover the IRA into the spouse's IRA or qualified workplace plan (i.e. combine the money)
3. Spouse treats herself as a beneficiary (keeps the account as an "inherited 401(k) or "inherited IRA" instead of assuming ownership).
Under option 1 or 2, the spouse becomes the owner of the IRA, and if they make withdrawals before age 59-1/2, they are subject to the 10% penalty for early withdrawal.
If the spouse chooses option 3, then they have to follow these additional rules,
1. Take an RMD every year based on their life expectancy (or withdraw more if they choose), withdrawals are exempt from the 10% penalty or
2. Opt-in to the 10 year rule, meaning the entire account must be withdrawn and closed by the end of the tenth year after the owner's death, but no RMDs are required in the mean time (withdrawals are exempt from the penalty).
Based on advice from @dmertz , they suggest that spouses should not be in a hurry to make a decision, and that it is often better for the spouse to leave the IRA as inherited, rather than assuming ownership, so they make withdrawals without penalty. However, each person's situation is unique, and each taxpayer may want to consult their own financial advisor.
See this old post, just adjust the dates for current year.
https://ttlc.intuit.com/community/retirement/discussion/inheriting-spouse-s-ira-i-m-under-59-1-2-yea...
