Surviving Spouse Dies – RMD’s had started
Hi I’m confused about a beneficiary’s “continuing” RMD’s in this situation.
Facts:
Original IRA owner husband dies in 2024. He had already started RMD’s, BUT was much younger than Surviving Spouse (who is Sole beneficiary). Presume she leaves account as Inherited account, and timely ELECTS section 327. However, her RMD’s are smaller using the Original owner’s Single LE divisor.
Let’s say she dies in March of 2026. She already took her year of death RMD in early 2026, and her beneficiary is her son.
I THINK:
Son gets 10-year rule (he can’t be an “Eligible” beneficiary even if disabled, because RMD’s had already started). He must “continue” her RMD’s (until the 10th year 2036 when account must be fully distributed).
My CONFUSION is that I think that because she elected 327, the RMD’s would be based on HER life expectancy in year of death, minus 1 (for her son’s RMD, which begins in 2027, and minus 1 for subsequent years). (pretty sure he CANNOT use his own LE divisor.)
But since SHE was taking RMD’s based on her husband’s LE divisor – does this have relevance to the beneficiary’s RMD’s?
Further, what if she HADN’T elected Section 327? Then would the son’s RMD’s continue to be based on the original owner’s LE divisor (-1 each year) instead?
Thanks so much!!
Permalink Submitted by Alan - IRA critic on Fri, 2025-06-06 18:54
The proposed Sec 327 Regs indicate that when a surviving spouse under the election passes, her successor beneficiary is not eligible to be treated as a designated beneficiary, because despite using the Uniform Table the spouse was still a beneficiary. That makes her beneficiary a successor beneficiary subject to the 10 year rule and he must continue annual beneficiary RMDs. These RMDs are based on the surviving spouse’s single life table divisor for her age in the year of her death and are then reduced by 1.0 for each year thereafter.
Now if she had not elected Sec 327, perhaps because she is so much older than her deceased spouse, and was using his single life divisor reduced by 1.0 each year, there is an interesting question that predates Secure. Pub 590 B has recognized that because a surviving spouse recalculates divisors (no 1.0 reduction based on her age), at some point her divisor might become higher than the non recalculated divisor and her RMD in that year would switch over to her own age. But the rules were never clear what the successor beneficiary divisors would be. Would they continue the RMD schedule based on the original parent’s younger age or would they have to switch over to the surviving parent’s divisor. And what if the above switch in surviving parent’s divisor would not have occurred until after her death? I think the successor (son), would not be able to change the divisor that applied in the year after her death other than the 1.0 annual reduction, whether that divisor was still based on original IRA owner’s age or mother’s age.
Further, in this example, because Sec 327 has irrevocably been elected, there is no going back to the single life table for the surviving spouse. But she could elect to assume actual ownership of the inherited IRA and her RMDs would not increase because she is already using the Uniform Table and her age. Assuming ownership would make the son a designated beneficiary upon her death and while he would still have the 10 year rule, his annual beneficiary RMDs would be based on his age. Due to mother’s advanced age, if the son inherited as a successor beneficiary, the IRA won’t even last 10 years if she is over age 82.