RMD Calculation After Divorce
We have a client who finalized their divorce in February 2023. During the marriage, each was the primary beneficiary to the other’s IRA. They are more than 10 years apart in age. Since they were still legally married from Jan 1 – Feb 23, 2023, which life expectancy is used to calculate the RMD payout in 2024? I calculated using the Uniform method (no spouse beneficiary) however, the custodian is reporting as a joint life expectancy, which reduces the RMD by more than $4,000. We both have the same divisor of 33.1, so the only difference is Uniform vs Joint. I know that we use the 12/31 value of the prior year to calculate the RMD for the current year, however, I am hoping for some clarity on events such as divorce or marriage that occurred in the previous year, and making sure the calculation is being done correctly. Thank you!
Permalink Submitted by Alan - IRA critic on Wed, 2024-04-03 02:47
Per Pub 590 B, if the older spouse changed their beneficiary anytime in 2023, the prior spouse cannot be treated as the sole beneficiary for 2023, and the Uniform Table would apply to the 2023 RMD. If the beneficiary was not changed in 2023, the Joint Life table would apply.
In 2024 since the first spouse was no longer the spouse, even if they remained the sole beneficiary, the Uniform Table applies. Am assuming that the IRA owner did not remarry in 2023 to another more than 10 years younger sole beneficiary spouse.