RMD year after death

Submitted by Howard Hook on Wed, 2007-12-05 16:55

Husband age 83 dies in 2006 after satisfying his RMD for that year.
Spouse beneficiary age 83 as of Dec 2007 has not rolled over husbands IRA into her IRA acct. We would like to do a spousal rollover (spouse has an IRA at different custodian than husband) but the custodian is telling us that the spouse must satisfy the RMD for 2007 before they will transfer IRA to other custodian.

Question 1 – Does this sound correct that custodian is requiring the RMD to be taken prior to transfering?

Question 2 – What is RMD based on (life expectancy, acct balance, etc.)

Thanks as always.

Howard

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Permalink Submitted by Alan Spross on Thu, 2007-12-06 05:50

The 2007 RMD must be satisfied, but the custodian is incorrect in requiring that it be done from the inherited account that the survivor is rolling over.

The rule states that if the surviving spouse elects to treat the IRA as their own in a year after the year of death, the RMD for the entire year (2007) is determined as if the survivor owned the IRA all year. And if the survivor owned more than one IRA account, they are allowed to take the RMD from any combination of the accounts. The following is pasted from the 2002 RMD ruling:
>>>>> >>>>>>
Although the IRA to IRA transfer is not
treated as a distribution for purposes of
section 401(a)(9), in light of the fact that
the required minimum distribution with
respect to the transferor IRA can be
taken from any IRA, the transferor IRA
will be able to transfer the entire
balance and will not be required to
retain the amount of the required
minimum distribution for the year.
>>>> >>>>>>>

However, this may not be worth arguing with the custodian because the RMD amount will be the same whether taken from each account or taken from only one of them after the rollover. Since the survivor will own each account, the RMD is based on her life expectancy for the age attained in the year following death using Table III (divisor 16.3 for age 83). This divisor will apply to the 12/31/06 balance for each of the IRA accounts.

Permalink Submitted by Howard Hook on Thu, 2007-12-06 15:30

Alan,

Once again thank you for your answer.

Quick question – when you say the rule are you referring to 2002 regs that came out.

Also, is there something out there that allows me to either purchase hard copy or online (regs, PLR’s, etc.) so I don’t need to keep bothering you with questions that I may be able to research on my own? Maybe like an IRA tax service or something like that?

Thanks

Howard