Single Life Table or Uniform Table?
We have a client whose spouse died after their required beginning date (post 2020). The spouse elected to inherit the deceased’s IRA, rather than step into it as their own or roll into their own existing IRA. They are getting conflicting information from financial institutions on the life expectancy table they can use for calculating their RMD. Based on current version of IRS Pub 590B, it seems to read that this scenario would result in using the longer of their single life expectancy in Table 1 or the deceased owner’s life expectancy. Is there language in the IRS Final Notice from July 2024 that creates exception for “certain spouses”? Certain spouses wording was used by one of the institutions; is that only for spouses who are starting distributions in 2024 or is it broader?
Permalink Submitted by Alan - IRA critic on Mon, 2024-09-23 17:40
Please supply the years of birth of both spouses and the date of death, and I can provide a more specific answer, since there are now 3 options instead of two. Your question about 2024 deals with the new option, which is when the spouse still has a beneficiary IRA but has elected to be treated as the owner for RMD purposes and can use the Uniform Table while still the beneficiary. But over the years far too many surviving spouses fail to assume ownership and their RMDs are much higher than if they did.
Permalink Submitted by Keith Hubble on Tue, 2024-09-24 09:48
Survivor DOB is 03/19/1944; Deceased DOB & DOD are 12/18/1948 & 11/14/2022
Permalink Submitted by Alan - IRA critic on Tue, 2024-09-24 10:45
OK, with these dates and surviving spouse being 80, the spouse should assume ownership of the inherited IRA. RMDs will be much lower with the Uniform Table than the single life table, even though the deceased was 4 years younger. If ownership is assumed this year, the beneficiary RMD will be replaced by the owner’s age 80 Uniform Table RMD.
The new option (election to be treated as the owner for RMD purposes) would not have been beneficial here, but the SS is not even eligible for it since their beneficiary RMDs would have started before 2024 (in 2023).
SS was responsible for completing deceased’s 2022 year of death RMD if deceased did not complete it. And if the SS failed to complete the 2023 beneficiary RMD last year, they defaulted to ownership status at the end of 2023 which would have reduced any late 2023 RMD.
But the SS should have elected to assume ownership from the start in this case, as that would have been preferable. Or they might have needed the higher beneficiary RMDs, in which case no damage done. When ownership is assumed, the funds will be transferred to an IRA fully owned, and the deceased’s name will no longer be on the account. Obviously, new beneficiaries should be named.