Spousal IRA RMD Table
90 year old client is a widow who inherited an IRA from her husband. To calculate her annual RMD is Table I or Table III used? Apparently the account was never transferred into her name or into any of her existing IRA accounts. Does she have to elect to transfer the account into her name in order to use Table III? What is the default if no action is taken? Seems like she is simply the 100% beneficiary with full rights to the assets. Must she use Table I to calculate her RMD if this is the case? She was not more than 10 years older than her husband. Thanks for any help.
Mark
Permalink Submitted by Alan - IRA critic on Mon, 2018-11-19 23:25
To use the Uniform table she must elect to become the owner of the inherited IRA OR default to ownership status by failing to take the full inherited IRA RMD required in any year after the death of her husband. If she is deemed to have become the owner by default, then her RMD for that year forward will be determined using the Uniform table. If that happens she should still have the IRA retitled to her as owner. That should be done by advising the IRA custodian that she elects to assume ownership of the inherited IRA. Then she can move it to her own IRA account by direct transfer (will not count as a rollover). If she inherited any basis in his IRA, part of her distributions will be tax free, but she must file an 8606 to claim the inherited basis. Of course, she also needs to name her own beneficiary on this IRA ASAP. Note that Uniform Table RMDs are far less than RMDs using the single life table. Assuming ownership (by active election or by default) also saves the stretch for HER beneficiaries who can use their own life expectancy when she passes rather than having to continue her RMD divisor schedule.