Inherited IRA RMD

Submitted by John Going on Thu, 2020-04-02 14:02

My client’s spouse passed away in 2019 and she inherited his sizable IRA.

I understand RMDs have been suspended for 2020 as a result of the CARES Act.

My question – The IRA has been moved into the surviving spouse’s name. Under normal circumstances (setting aside CARES for the time being), when would the surviving spouse be required to start taking RMDs (the deceased spouse was born October 1952)?

The IRS Publication seems to indicate that she does not need to take RMDs until it would have been mandatory for the deceased taxpayer to take them. However, T Rowe Price is telling my client she needs to begin taking distributions this year since the accounts are in her name.

Again, I know CARES affects this year, but for now let’s set that aside.

Thanks,

John



Submitted by Alan - IRA critic on Thu, 2020-04-02 15:55

  • If she had left the IRA in inherited status, her first beneficiary RMD would not have been required until the year he would have reached 72 (20 years from now).  If your client did the “spousal rollover” where she is no longer shown as the beneficiary, but rather the IRA owner she would have no 2019 RMD because he passed prior to his RBD, no 2020 RMD because they are waived by the CARES Act, and after 2020 her RMD would depend on her own age. What is her age at the end of 2019? Disregarding the 2020 RMD waiver, she would only have a 2020 RMD due if she had reached 70.5 at the end of 2019.

Submitted by Ralph Miller on Thu, 2020-04-02 21:22

since past RMDs from neither Owned IRAs or Inherited IRAs were eligible for the 60 day rollover having been deemed as RMDs, what leads this forum to believe that Owned 60 day rollovers will be allowed for RMDs as outlined elsewhere but Inherited IRA RMDs will not?   

Submitted by Alan - IRA critic on Thu, 2020-04-02 22:10

  • First, none of these distributions are RMDs, so the rollover eligibility is the same as always for ordinary non RMD distributions by owners. But non spouse beneficiary RMDs have never been eligible for rollover and that also remains the same. 
  • Specifically, Sec 2202 of the CARES Act states that distributions can be repaid (rolled back) to plans to which a rollover contribution can be made under existing law. For example, for IRAs Sec 408(d)(3)(C) is titled “Denial of Rollover treatment for inherited accounts”. Therefore, the CARES Act is very clear on this.

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