My clients: The husband is soon to pass away. His wife will inherit his Roth, Traditional, and INHERITED IRAs.
1. What shall I look out for?
2. Can she simply name herself account owner, or does she have to open her own IRAs to transfer into?
3. What happens when she inherits his INHERITED IRA from his father who passed many years ago?
4. He is currently taking RMDs, but what if he passes before this year’s RMDs?
Thank you very much!
She’s early 60s and has a roth ira. Will inherit husband’s Inherited IRA, Traditional IRA, and Roth IRA. What should I pay attention to? What are her options?
For the IRAs that he owns, after submitting the death cert and other beneficiary info, the custodian will probably transfer the balance into a new inherited IRA for her. However, she should immediately elect to assume ownership of the inherited IRAs (known as spousal rollover) and the custodian will then transfer the balance into either a new IRA (traditional) or an existing IRA she already owns (her Roth IRA). HIs RMDs have not yet begun so there is no year of death RMD for her to take. Her own RMDs will not begin until she reaches 72. If husband has any basis in the TIRA from non deductible contributions reflected on Form 8606, she inherits that basis and will have to file an 8606 on her TIRA showing that basis on line 2.
For his inherited IRA, she will be a successor beneficiary and cannot roll it over. For the already inherited IRA she is responsible for completing his inherited IRA RMD for 2021 if he did not. She will not have annual beneficiary RMDs, but will be subject to the 10 year rule which requires the inherited IRA to be drained by 12/31/2031.
If either her own Roth IRA or his were opened prior to 2017, both of her Roth IRAs (or combined Roth IRA )is fully qualified. There are no RMDs and all distributions whenever she needs them are tax free.
Permalink Submitted by Tina Anders on Fri, 2021-01-22 22:45
Note that the RMDs he’s getting are from the INHERITED IRA only. He’s only 70.