IRA of Deceased Spouse in 2019

Submitted by Pidgesmom on Thu, 2023-02-09 20:02

Question
If the remaining spouse left the deceased IRA “as is” how long can that IRA remain uninherited before a state considers it abandoned property? Been told it must be inherited within 5 years.

IRA was being left as is until deceased spouse’s RMD requirement comes into effect at age 73 in 2025.
The remaining spouse’s RMD year is 2024.

Being told that surviving spouse must make it an inherited IRA within
5 years of the deceased death or it would be considered abandoned property.(death in EOY 2019)

Before recent RMD changed from age 72 to 73 the plan was to delay inheriting the IRA until the deceased RMD year had occurred which would be a year after the remaining spouse’s RMD date. Surviving spouse is a year older than the deceased.

Thanks in advance for any insights!



Submitted by Alan - IRA critic on Thu, 2023-02-09 21:47

There is no specific way to determine exactly when an account with no activity would escheat to the state. It depends on the institution, the state, and other factors such as no transactions. An effort would usually be made to contact the owner by mail and provide a deadline to contact the custodian. Loss of contact with the owner of beneficiary if the owner has passed in the main cause of escheatment. An inherited IRA should never be left titled to the owner. The sooner the beneficiary has it retitled in beneficiary form the better for several reasons. Even if the spousal beneficiary does not have to take beneficiary RMDs for several years, they should certainly keep their address current with the custodian, receive statements etc. None of this can be done until the inherited IRA is retitled. When an IRA is considered abandoned (no contact) by the owner or beneficiary, the IRA is cashed in and federal withholding sent to the IRS under the SSN of record on the account. Recovering these funds is not an easy process in many states, therefore I would advise this beneficiary to take care of things before the funds are escheated.



Submitted by David Mertz on Thu, 2023-02-09 22:02

  • Perhaps there is a fundamental misunderstanding here.  The IRA became an inherited IRA at the moment of the deceased spouse’s death.  It is not an “uninherited IRA.”  Formally retitling it as an inherited IRA for the benefit of the surviving spouse allows the custodian to know where to send forms required to be provided at least annually and allows the spouse beneficiary to designate their own beneficiaries, but it’s still an inherited IRA.
  • At any time in the future, such as the year the deceased spouse would have reached age 73, the surviving spouse can choose to treat the inherited IRA as their own.  Formally retitling the IRA as an inherited IRA does not change that.


Submitted by Pidgesmom on Fri, 2023-02-10 19:11

Thank you DMx & Alan for your insights.For sure the information received at the institution was not conveyed for the person involved did present needed documents for proof of death & spoke to the brokerage firm directly. Statements etc have been regularly sent to the spouse. Based on your responses, it seems the IRA has to be reclassified as an “inherited IRA” under the spouses SS# but the RMD of the original owner determines when the RMD’s must start. Once this is done, changes in investments can be done by the spouse and the RMD’s once taken will be income to the remaining spouse.



Submitted by Alan - IRA critic on Fri, 2023-02-10 19:29

Yes, that is correct. Once the inherited IRA is properly retitled, the beneficiary can change investments and name a beneficiary regardless of when the first beneficiary RMD is due. In addition, if the beneficiary were to fail to complete any beneficiary RMDs, they are treated as the IRA owner for that year and beyond. As the owner their RMD from the Uniform Table will be lower than their RMD would have been as beneficiary.



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