RMD of Inherited IRA by spouse
A client whose spouse died a couple years ago before reaching RBD rolled the deceased spouse’s traditional IRAs into an inherited IRA for his benefit. In 2022, the deceased spouse would have turned 72 so RMDs should start; however, he’d like to now roll the accounts to his own IRA (spousal IRA rollover).
If he does this, which RMD factor should he use for the 2022 RMD (on the 12/31/21 balance)? The surviving spouse’s life expectancy based on single life table or the surviving spouse’s life expectancy based on uniform lifetime table? Going forward, I assume the uniform lifetime table can be used.
Permalink Submitted by Alan - IRA critic on Tue, 2022-01-25 18:06
His 2022 he would be treated as owning the IRA the entire year. The 12/31/2021 balance for the inherited IRA would be used with the new Uniform Table to determine the 2022 RMD.
There is also a default rule which makes him the automatic owner if he fails to complete the full beneficiary RMD (single life table) by the end of 2022. Therefore, if he did nothing and forgot the beneficiary RMD, his actual RMD for 2022 would be that of an owner. This protects sole beneficiary surviving spouses and reduces their late RMDs. But in order to have the IRA titled to conform with the actual RMD status, it is preferable to take action and notify the custodian that the client is electing to assume ownership of the inherited IRA to avoid a confusing situation. This should be done before any distributions are taken this year, since any distribution from the inherited IRA before electing ownership would be treated as a beneficiary RMD and not eligible for rollover.