Inherited IRA
A client received an inherited IRA from his sister (78) who passed away in January 2024. The client is 80 years old and an eligible designated beneficiary. Since the sister was younger then our client, whose age do we use for RMD? Are you able to use the deceased sister’s age since the RMD amount would be lower for her?
Permalink Submitted by Anthony Perrone on Wed, 2024-12-11 10:56
Do we have a choice of whose age we use?
Are we able to use the beneficiary’s age using the uniform life table to calculate the RMD since that would lower the RMD?
Would the beneficiary be considered an eligible designated beneficiary even though he is older than the deceased?
Permalink Submitted by Henry Levine on Mon, 2024-12-16 09:32
Timeframe for decision.
Inherited IRA. How long does the spouse to make a decision – keep the ira as is, convert to her/his own, and so forth. If the spouse does nothing?
Same question for 401 (k)
Thanks
Henry
Permalink Submitted by Alan - IRA critic on Tue, 2024-12-17 11:10
Original thread addressed a non spouse beneficiary.
A sole spousal beneficiary has 3 options now.
The first is to continue as the beneficiary, which is the case if the spouse does nothing. However, in the first year that the spouse fails to complete a beneficiary RMD, they default to ownership status.
The second (and new) option is to continue as the beneficiary but notify the custodian that they are electing to be treated as the owner for RMD purposes only and can use the Uniform Table. The deadline for this election is the end of the year following the year of death. The third option below can be made from this status anytime.
The third option is to assume full ownership of the inherited IRA, and there is no time limit for this. Once owned, the IRA can never return to beneficiary status.
The first two options above also apply to 401k, 403b, and 457b plans, but the third option is only available for IRAs.