Difference between Roth and Traditional RMD calculation for conduit trust inherited IRAs?

Submitted by Craig Smith on Sat, 2023-11-25 16:38

An estate planning attorney is directing us that there is a different procedure between Traditional IRA and Roth IRA RMDs for a conduit trust with the surviving spouse as beneficiary.

Facts: Decedent (D) was 80; died in 2023. Survivor (S) also 80. Disclaimer conduit trust named as beneficiary of IRAs with S as sole beneficiary.

Here is the direction that is being provided by the attorney:

RMD Amount for Surviving Spouse Beneficiary.
a. Roth IRA. S’s life expectancy factor from the IRS Single Life Expectancy Table is
used to calculate the amount of the Roth RMD. Because D died in 2023, the first RMD to be
distributed to S will be in 2024. Accordingly, the 12/31/2023 balance of the Roth IRA will be
divided by 10.5 (life expectancy for an 81 yr old from the Single Life Expectancy Table) to
determine the RMD that must be made in 2024. Then, the Roth RMD is recalculated each year of S’s
life. For instance, the next year’s (2025) Roth RMD calculation will use the life expectancy from the IRA
Single Life Expectancy Table for age 82 (9.9).

b. Traditional IRAs. Because of the “longer of” IRS rule that applies to Traditional IRAs and
requires the longer of the decedent’s or the surviving spouse’s life expectancy to be used when the
decedent dies after RMDs have begun, D’s life expectancy factor in the year of her death from
the IRS Single Life Expectancy Table must be used to calculate the traditional IRA RMD each year.
Different from the Roth IRA calculation, the life expectancy factor is not updated each year from
the tables. Instead, it is simply reduced by one each year. Because D died in 2023, the first
RMD to be distributed to S will be in 2024. Accordingly, the 12/31/2023 balance of the
Traditional IRA will be divided by 11.2 (life expectancy for an 80 yr old from the Single Life
Expectancy Table) to determine the RMD that must be made in 2024. Then, the life expectancy factor
is reduced by one each subsequent year. For instance, the next year’s Traditional RMD calculation
will use the life expectancy from the IRA Single Life Expectancy Table for age 80 less one (10.2).



Submitted by Alan - IRA critic on Sat, 2023-11-25 18:03

  1. I agree with the inherited Roth IRA divisors.
  2. But not for the TIRA. While the “longer of” rule does apply when the owner passed after the RBD, due to the divisor determination rules, the divisor of the decedent will never produce a “longer of” result when the beneficiary is the same age as the decedent.  The main reason for that is the decedent’s divisor is determined by using the decedent’s age in the year of death, not the year after. Accordingly, the 11.2 divisor in the year of death (age 80) is reduced by 1.0 for a divisor of 10.2 for 2024. But the beneficiary divisor in 2024 based on the surviving spouse’s age of 81 in 2024 is 10.5, and being higher than 10.2 will produce a longer distribution period. Therefore, in this situation, the TIRA divisors are the same as the Roth IRA divisors, both based on the re calculated age of the beneficiary.
  3. If the beneficiary is a couple years older than the decedent, the initial “longer of” divisor will be based on the age of the decedent, but due to recalculation of the sole spousal beneficiary divisor, the calculation will eventually switch over to that of the beneficiary. Consider an example with the beneficiary spouse being 82, 2 years older than the decedent. The first 5 divisors using the decedent’s age are 10.2, 9.2, 8.2, 7.2 and 6.2. Using the beneficiary’s age with recalc, those same divisors are 9.3, 8.7, 8.1, 7.6, and 7.1. The decedent’s divisor is higher for the first 3 years, but in the 4th and later years, the recalculation of the beneficiary divisor results in that divisor being higher for all years after the 3rd year. Pub 590 B refers to this situation on p 10 as copied below.
  4. “Surviving spouse is sole designated beneficiary. If the owner died on or after his or her required beginning date and his or her spouse is the sole designated beneficiary, the life expectancy the spouse must use to figure his or her required minimum distribution may change in a future distribution year. This change will apply where the spouse is older than the deceased owner or the spouse treats the IRA as his or her own.”
  5. Above comments assume that the conduit trust is qualified for look through and was correctly drafted as a conduit trust. 

Submitted by Craig Smith on Sat, 2023-11-25 18:49

I couldn’t understand why it would use the 2023 (age 80) life expectancy next year. Also assumed that there could be a change in future years, but good to see the actual reference. I’m thoroughly grateful for your willingness to share on this forum!

Submitted by Norman Cook on Mon, 2023-11-27 14:00

I am confused with #1  answer.  This is a Roth.  I did not think there was any RMD for a Roth. Only that it must be all  withdrawn in 10 years.

Submitted by Alan - IRA critic on Mon, 2023-11-27 14:11

The inherited Roth by a conduit trust EDB (spouse) will have annual RMDs unless the trustee of the trust opts out of EDB treatment and into the 10 year rule by the deadline, which option is always available to EDB Roth beneficiaries because Roth owners all pass prior to RBD. However, while that option is typically not beneficial for the remainder trust beneficiary, although it could be in certain situations. 

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