Spousal inherited IRA
Prospect inherited an IRA from her spouse when he passed away in 2019. Both spouses were beyond their RBD ages in 2019 when he passed. The account is currently titled as an inherited IRA.
She has not taken any distributions from the inherited IRA since he passed away. I’m not certain if he had taken an RMD prior to his passing in 2019. If he did not, I understand she would have needed to take one in 2019 prior to year-end.
Was she required to take an RMD from this account from 2021 – 2024? She does not need the income from the inherited IRA. Is she able to rollover the assets into her own IRA?
Permalink Submitted by Alan - IRA critic on Mon, 2024-08-26 18:42
A 2021-2024 beneficiary RMD was required, but the default rules state that the first year in which a sole surviving spouse fails to complete a beneficiary RMD (2021), they automatically default to ownership status. In that case, the actual RMDs for these years and including 2024 will be based on the Uniform Table, from which RMDs will be lower. Note that the 2021-2024 RMDs were not waived since the 10 year rule never applied to her.
She should request that the IRA be retitled showing her as the owner, after which she should calculate and distribute the 2021-2024 RMDs, and the rest of his 2019 RMD, if applicable. A 5329 should be filed for each year requesting waiver of the penalty for reasonable cause (eg was not aware of RMD requirement), and the IRS will probably grant the waiver. All distributions will be taxable in the year received. Remember that the RMD tables changed in 2022.