Spousal Beneficiary (remaining a beneficiary)
Good afternoon and Happy holidays
FACTS:
Traditional IRA owner, < 70 1/2 passed away
Surviving spouse – significantly older
Surviving spouse elected to remain a bene – account has been re-registered as inherited IRA (deceased spouses name FBO: surviving spouse)
No RMDs have been taken –
Question(s)
Surviving spouse has subsequently remarried
Can he name his new spouse as a beneficiary on the inherited IRA?
Would the new spouse get to use her life expectancy for the “stretch”?
IF not, would it make sense for the surviving spouse to commence taking RMDs by making the IRA his own (or rolling it to his own) thus allowing his new spouse to use her own life expectancy (withouht having to recalculate)?
Thank you
Permalink Submitted by Alan - IRA critic on Mon, 2014-12-15 20:04
Yes, he could name her as his successor beneficiary on the inherited IRA. He does not have to start RMDs as a beneficiary until the year his deceased spouse would have reached 70.5. Were he to pass prior to having to start these RMDs, his current spouse could be treated as a designated beneficiary. However, if he passes in his first RMD year as a beneficiary without having rolled this over, then his current spouse would be treated as a successor beneficiary and have to continue HIS RMD schedule. Therefore, very early in the year in which the deceased spouse would have reached 70.5, he should roll the inherited IRA into his name as owner. That will not only reduce his own RMDs (owner has lower RMD than beneficiary) but also upon his death allow his current spouse to roll over the IRA to her own name OR to treat it as inherited and using her own life expectancy when her RMDs had to begin.