Spousal RMD
Account owner died August 2010. Owned 403b individual account, once spouse notified insurance company they wouldnt process RMD to decedent. Further it took until 8/2011 for insurance company to rename the account to spouse. Account originally set up in 1970, they had to find the original beneficiary designation. Spouse assumed insurance company would automatically send RMD as they had in past to decedent, they didnt and did not sent a notice to spouse. Now what???
Thanks
Permalink Submitted by Alan Spross on Wed, 2012-01-04 23:18
Decedent’s 2010 RMD must be completed by the surviving spouse if decedent did not take full RMD before passing.
Decedent apparently passed after the required beginning date, so the surviving spouse must take the 2011 beneficiary RMD ASAP from the plan and they must also take the 2012 RMD as beneficiary if they want to roll over the balance to their own IRA in 2012. RMDs for an IRA owner will be lower than the RMD as a beneficiary.
Surviving spouse should file Form 5329 with 2011 return and request relief from the penalty, and also a 5329 for 2010 if the decedent’s 2010 RMD was not completed. Spouse should explain the circumstances and the IRS will most likely waive any penalties for any late 2010 RMD and the late 2011 RMD.
Permalink Submitted by Peter Semler on Thu, 2012-01-05 14:46
Wow, thanks for the quick response! The spose (78 yrs) re-characterized if that is the correct term, the account to her name. We’ll get the insurance company to issue a 2010 and 2011 RMD. Should the 2010 RMD be based on decedents table or spouse? i belive there is only a year or two difference in age.
Will the spouse need to amend the 2010 return or simple file the 5329?
The “late” RMDs will also be 2012 income items?
Thanks again
Permalink Submitted by Alan Spross on Thu, 2012-01-05 22:22
The 2010 RMD is the decedent’s RMD, ie the same amount the decedent would have taken had they lived all year. While it is the decedent’s RMD, it must be paid to the beneficiary and is taxable to the beneficiary in the year received. The spouse can file the 5329 by itself for 2010 requesting that the penalty be waived. A final joint return was probably filed, but the surviving spouse should show their own SSN on the 2010 5329.
2011 will also need a 5329 when it is filed.
For more specifics in requesting a waiver of the penalty due to reasonable cause, see p 6 of the 5329 Inst.
All distributions including the late RMDs will be taxable to the surviving spouse in the year received, apparently 2012. I suggest they take the 2010 and 2011 RMDs together and make a copy of the distribution statement to include with the 5329 waiver request. Then the 2012 RMD can be taken anytime prior to the end of this year.