Death of Spouse

Submitted by Thomas Bradley on Sun, 2023-09-17 17:19

Mrs. Smith died in 2023 and owns an IRA. She has started RMDs. The beneficiary is the surviving spouse, age 78. Rather than leaving his deceased spouse’s money where it is, he wishes to set up an annuity in his name, transfer her IRA funds to this new annuity, and begin RMDs. Does he simply send a transfer request to have the funds sent to the new company to be put in his new annuity? Since he is a spousal beneficiary, does he have a 10-year rule to consider? Are there any other concerns or considerations?



Submitted by Alan - IRA critic on Sun, 2023-09-17 19:24

  • Surviving spouse should proceed in this order. First, have the current account re titled in beneficiary form and then immediately elect to assume ownership of the inherited IRA. There is no advantage to continuing as beneficiary as his RMD as beneficiary will be much higher. Second, determine if spouse’s 2023 RMD was completed by spouse, and if not complete it. Finally, open the IRA annuity with the chosen insurance company and have them process a direct transfer request from the current custodian. 
  • If he cares about the options for his beneficiary upon his death, he should determine what those options are for the form of annuity he wants, eg variable annuity, fixed annuity, or immediate annuity. 
  • His first RMD from this annuity will be in 2024 based on his age in 2024 and the Uniform Table. He should also determine if he inherited any IRA basis from wife’s IRA.

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