choice of beneficiary for IRA
If an individual chooses his IRA beneficiary to be his adult children rather than his spouse, will the RMD during the lifetime of the IRA owner be less than if the Spouse had been the beneficiary. Clearly, the Spouse must approve this beneficiary choice. Thank you
Permalink Submitted by Alan Spross on Thu, 2012-10-25 17:39
The RMD will be the same as with a spouse beneficiary except that it would be higher than with a sole spouse beneficiary more than 10 years younger than the IRA owner.
The spouse must only waive beneficiary rights to the IRA in a community property state.
Permalink Submitted by joyce graham on Fri, 2012-10-26 15:40
Sorry, don’t understand why a younger beneficiary would produce a higher RMD?
However, I believe you are saying that the adult children can be the beneficiaries during lifetime RMD distributions. Thank you.
Permalink Submitted by mk foss on Fri, 2012-10-26 16:56
The tables for calculating RMDs would not allow anyone to take smaller payments because a nonspouse beneficiary was more than 10 years younger since they were adopted in proposed regulations back in 1987. In 2002 when IRS issued final regulations the rule carried forward so now the RMDs are the same for an individual whether he/she has a young nonspouse beneficiary, an older nonspouse beneficiary, no beneficiary or a spouse beneficiary who is less than 10 years younger. The only time that the RMD is less than what is determined by the uniform table is if there is only one beneficiary who is a spouse more than 10 years younger than the owner of the IRA.