Spousal Inherited IRA to IRA RMD Question
As of 12/31/2023 our client had a spousal inherited IRA. In 2024 the account was transferred to an IRA in her name. Since the account was still an inherited IRA on 1/1/2024 does she need to take an RMD? Since the account in now in an IRA and she is under 59.5 if she must take an RMD, will the withdrawal be subject to the 10% penalty?
Permalink Submitted by Alan - IRA critic on Wed, 2024-08-28 16:18
She is treated as the IRA owner for the entire year 2024, so there is no 2024 RMD. The downside is that if she needs distributions prior to age 59.5, the penalty will be incurred.
The IRS Regs with respect to Sec 327 were just released, and would have allowed the client to elect to be treated as the IRA owner for RMD purposes only. With that election distributions prior to age 59.5 would have been penalty free and she could have assumed full ownership later. But since she already assumed ownership, she will have to wait until 59.5 to take penalty free distributions, but will not have RMDs for years.