Combine IRAs – a second opinion

Submitted by Mark Wilson on Thu, 2024-02-15 03:54

My client passed away at the end of 2023 at the age of 75 and was taking RMDs from her IRA. Her husband was the 100% primary beneficiary and he’s going to turn 83 this year. Combining her IRA into his looks like the obvious move. Am I missing anything? Are there times (when both of the couple are taking RMDs) where keeping the spouse’s IRA as an inherited IRA makes sense? Inherited IRAs make sense when the inheriting spouse is under 59 1/2 and when the spouse is pre-RBD, but I cannot think of any advantages of an inherited IRA in this case.

Thanks for any education (or confirmation) you can provide.



Submitted by Alan - IRA critic on Thu, 2024-02-15 15:20

Beneficiary RMDs for the surviving spouse would only be lower than the Uniform Table if the deceased spouse passed after RBD and the surviving spouse was at least 12 years older than the deceased spouse. With an 8 year difference the Uniform Table will produce a lower RMD, so in this case the surviving spouse should elect to assume ownership of the inherited IRA. He will then be able to use the Uniform Table for his 2024 RMD.

Submitted by Mark Wilson on Thu, 2024-02-15 23:22

Thanks for the quick reply.  I’m seeing that Secure 2.0 changed the rules to allow (in 2024) an Surviving Spouse’s Election for Treatment as a Deceased Employee.  This seems to be the best option in my client’s case (switch her IRA to an inherited IRA and take RMDs as if she is still living).  My client died December 2023 and we have not done anything with her IRA at this point, but I’m not sure this is an option giving the timing of her death.  Any thoughts?

Submitted by Alan - IRA critic on Thu, 2024-02-15 23:41

The election has always been available for IRAs, but it’s new for employer plans. Husband must complete wife’s 2023 RMD if not done prior to her death. He should elect to assume ownership in 2024 which will not only lower his RMDs, but his own beneficiary would then be a designated beneficiary rather than a successor beneficiary and that would also lower his own beneficiary’s RMDs. FInally, the new deadline for him to assume ownership will be 12/31/2024. After that date he can still do a rollover to his own IRA, but the RMD for that rollover year would be the higher beneficiary RMD. Assumption of ownership is much superior to the 60 day rollover process.

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