Inherited Spousal 403b
Wife age 69 died January of this year. Husband is 75 years old. What is proper titling of rollover account to defer taking RMD’s until age 72.
Wife age 69 died January of this year. Husband is 75 years old. What is proper titling of rollover account to defer taking RMD’s until age 72.
Permalink Submitted by Alan - IRA critic on Wed, 2021-09-22 15:39
For the husband to avoid RMDs until the year wife would have reached 72, the inherited 403b must either be kept in place or direct rolled to an inherited IRA. Husband should delay assuming ownership of the inherited IRA until the year wife would have reached 72. He would have an RMD that year, but would be treated as owning it the entire year and could use the lower Uniform Table for that year and beyond. An inherited IRA should be titled “H as beneficiary of W” or similar format required by the IRA custodian. The IRS accepts all custodian approved titling formats and there are quite a few of them around. If husband will be doing a direct rollover to an inherited IRA, the 403b administrator will have to first retitle the 403b as inherited, then husband should be sure that the rollover does not somehow go to an owned IRA. If he does not own an IRA at the IRA custodian, that reduces the chance of an error.
Husband may want to consider that delay of RMDs on the 403b balance will further concentrate his IRA RMDs later when his RMD % rises. He might be better off evening out the RMD income over more years if the 403b balance is significant. Note that if he expects to remarry in a couple years and will be filing jointly again using the lower joint tax brackets, then delay of the beneficiary RMDs 3 year might be more beneficial.