Inherited Spousal IRA- Pre Secure ACT

Submitted by Krista McBeath on Fri, 2022-12-02 16:50

For my sanity moving forward, I want to prepare my annual table for RMD calculations. My client is 56 when she lost her husband in 2014. He was 65 at the time. His DOB was 3/15/1949. We moved some funds to an inherited IRA with the intent of her delaying RMD until he would have reached his RBD. I am questioning whether the custodian is calculating the RMD correctly, and to confuse the issue further, updated tables and SECURE ACT are added to the mix.

Online calculators tell me to use a factor of 23.7, but I can’t see how they have backed into that factor. He would have been 70 1/2 in 2019, and she would have been 61. Can you please shed some light on this for me?

Also, she does have an IRA that was a rollover of his 401k. After she satisfies RMD this year, does she have any option of moving the funds into that account to avoid RMD?



Submitted by Alan - IRA critic on Fri, 2022-12-02 18:07

  • Her first beneficiary RMD was due in 2019 using a divisor of 24.4. 2020 RMDs were waived. 2021 divisor would have been 22.7.
  • 23.7 is the correct divisor for 2022, from the new RMD tables. This comes directly from the table, as a sole spousal beneficiary does not reduce the original divisor by 1.0 each year, as for other beneficiaries.
  • You must also consider the default rule which states that a sole spousal beneficiary who fails to complete the correct RMD in any year defaults from beneficiary status to ownership status. Therefore, if she felll short in 2019 or 2021, she actually owns the IRA now and should have it retitled as such. Same thing for 2022 – if she does not take any distribution this year she defaults to ownership status under which her own RMDs would not begin until 2030. Since she is now over 59.5 and beneficiary RMDs have begun, she should go ahead and elect to assume ownership of the IRA now. She will have no RMDs until 2030, yet she can take any distribution amount she needs without penalty.
  • Is the rollover IRA owned or inherited?  If inherited, she should elect ownership of this IRA as well. She could combine the two into a single owned IRA for simplification. 

Submitted by Krista McBeath on Mon, 2022-12-05 18:27

Excellent information.  Thank you.  I track all of this in the tables clearly now.

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