Year of death RMD by spouse

Submitted by [email protected] on Mon, 2007-11-26 18:13

I have a client whose spouse (age 71) died in early 2007. The deceased spouse had not yet taken his 2007 RMD. The surviving spouse (age 60) elected to treat the IRA as her own and transferred the account into her own existing IRA. The custodian for the accounts (same custodian for both accounts) is now saying the surviving spouse should have created an inherited IRA and then the surviving spouse should have taken the 2007 RMD out of the inherited IRA before transferring the balance to her own IRA.

The 2007 RMD needs to be reported on the surviving spouse’s social security #, so it seems to me that the surviving spouse could take the RMD out of her own IRA as long as the 1099R shows code 4 (Death) in the Distribution Box 7. Does this sound plausible? If not, any ideas on how to remedy this?

Thanks,
Steve F.

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Permalink Submitted by Denise Appleby on Tue, 2007-11-27 05:05

Just wondering…did he reach age 70 ½ this year or last year? , or, if he reached age 70 ½ last year, how early (this year) did he die? This may be stating the obvious, but there would be no RMD for the husband if he died before the [url=http://retirementdictionary.com/Required-beginning-date.htm%5Drequired beginning date (RBD).[/url]

Regarding your question, some systems are flexible enough to process the death-distribution from the non-inherited IRA, some are blocked from processing death-distributions from non-inherited IRAs. If it is possible to process the transaction from her non-inherited IRA resulting in a 1009-R reflecting a code 4 being issued for that amount, that would be a workable solution.

A roundabout solution may be to establish an inherited IRA, transfer then RMD amount to ( and distribute it from) that inherited IRA. In such a case, a request should be made to waive any maintenance or termination fee that may apply to the IRA, as it is just being established to accommodate the transaction and would be closed immediately.