I have a client that passed away when she was age 76. Her husband is the sole beneficiary of her IRA and is 81 years old. My plan was to rollover the IRA into a Inherited IRA and continue RMD’s on her life expectancy. She she was younger and had a longer life expectance, the RMD’s would be lower. If I would roll it over into his IRA, he would have to take RMD’s on his own life expectancy.
Am I right in my thinking?
Thanks
Thanks! So to clarify, if he rolled it over into his own IRA, he would use the Single life table divisors. If he rolled it to a Inherited IRA, he would have to use the Uniform table divisors. Is that correct?
No. When divisors are lower the RMD is higher. Therefore, the beneficiary should be looking for higher divisors and the divisor is much higher with the Uniform Table (lower RMDs). Assuming ownership would change the table to the Uniform Table. Maintaining the IRA in inherited status, the single life table with the higher RMDs would apply. Therefore, the beneficiary should assume ownership of the inherited IRA.
RMDs from an inherited/beneficiary IRA would be based on the factor from the Single Life Expectancy table resulting in higher RMDs. RMDs from his own IRA are based on the factor from the Uniform Lifetime table resulting in lower RMDs (more than 25% lower as owner than they would be as beneficiary).
Permalink Submitted by Alan - IRA critic on Wed, 2023-10-18 01:17
No. Even though beneficiary RMDs would be based on the age of the younger decedent, the single life table divisors are so much lower than the Uniform Table divisors, his RMDs as the owner would be much less than keeping it as a beneficiary. It’s not even close. He would have had to be in his very late 80s for beneficiary RMDs to be lower than as the owner.