RMD For Surviving Spouse
My wife is the sole beneficiary of my Rollover IRA. We are both 75. Pages 160-161 of your 2021 book say she would use the Single Life Expectancy Table to calculate her RMD after my death and “inherits” the IRA. My IRA Custodian says she would use the Uniform Lifetime Table (Table III of IRS 590-B) if she “assumes” the IRA after my death. Is there a difference in inherit versus assume, or is the custodian wrong?
Permalink Submitted by Alan - IRA critic on Mon, 2022-05-02 14:56
First, she inherits your IRA and has it retitled as a beneficiary IRA. She can continue that status as long as she wishes but would have to use the single life table for RMDs. However, this is rarely the best choice unless she is under 59.5, or is much older than you and does not want to take distributions until you reached 72. But based on YOUR ages of 75, there is no benefit of waiting to assume ownership. She could do it immediately after retitling as an inherited IRA. The custodian would then transfer the funds to a new IRA account titled with her as the owner. She can then use the Uniform table for her RMDs and that table produces a much lower RMD thann the single life table. If you did not complete your RMD before passing, she would have to complete it, but the Uniform table would start in the year she elected ownership, but not in the year of your death. Your IRA custodian is apparently assuming that she will assume ownership, and she should, and therefore would never actually use the single life table. Incidentally, there is also a default rule that automatically makes her the owner if she forgets to request it and fails to complete her full RMD as beneficiary. Therefore, there are some surviving spouses out there that own the IRA and do not know it, who may be taking out the wrong RMD or even not taking any RMD.