No RMD at age 72? Deceased spouse was younger
Hello,
Widow turns 72 this year. Husband spouse died at age 65 in 2020. All accounts moved to her this year, in 2021. She took his IRA as her own rollover IRA in March. It seems she has no RMD this year at age 72, because she had no balances in an IRA as of 12/31/2020. Does this seem correct? Thank you.
Permalink Submitted by Alan - IRA critic on Tue, 2021-06-29 03:00
No. Other than the year of death, if a surviving spouse acquires ownership in a later year, they are treated as having owned the IRA for the entire year. That includes using the 12/31/2020 IRA balance of the inherited IRA as if she owned that IRA.
If widow had maintained the IRA as inherited, there would be no beneficiary RMD due until the year husband would have reached 72 (2027). If she elected ownership in that year her the same rule as stated above would apply. Her 2027 RMD would be an owner’s RMD instead of a beneficiary RMD and that RMD would be much lower.
If she needs the distributions anyway then the ownership election is not so costly.
Pub 590B does an incomplete job of explaining the effects of owning the IRA the entire year with respect to the prior year end balance, and so do the IRS Regs.