H&W die together, 2nd question
H&W each have Roth IRA; each have begun RMDs from their own IRA; each have the other as primary bene and their minor grandchild as secondary bene; H&W die in same accident; whose life expectancy will be used for inheritor’s RMD? Thank you so much for your help.
Permalink Submitted by Alan Spross on Thu, 2008-06-19 19:20
There are plenty of issues here. Before addressing the RMD portion, there needs to be a determination of the actual beneficiary of H’s IRAs. That would require checking the IRA agreement for default beneficiary terms and in addition the state’s status with respect to the Uniform Simultaneous Death Act. In states that have adopted this, deaths within 120 hours are each deemed to have pre deceased the other.
If after consideration of the above, if H was deemed to have passed first according to your other post, then there was no contingent beneficiary at the time of W’s death unless W would have named her own. In that case the IRA agreement default beneficiary terms come into play, and it could have been the minor or more likely, her estate. In that case, probate of the estate would needed to be completed. A beneficiary through an estate when owner died after the RBD can only stretch the IRA over the owner’s remaining life expectancy.
Returning to the RMD question, here is the breakdown:
1) W’s TIRA and Roth IRA – Contingent beneficiary applies since H died first. Minor can get lifetime stretch based on minor’s age year after W’s death.
2) H’s TIRA – here is where all the above factors must be considered to determine who the beneficiary is following W’s death. For RMD purposes assuming W actually had the time to name the minor as her successor beneficiary, then the minor would still be stuck with W’s remaining life expectancy. W cannot be deemed owner when H passed after the RBD unless she actually assumes ownership.
3) H’s Roth IRA – same as above, EXCEPT here H is always deemed to have passed prior to RBD because a Roth has no RMDs. Since he passed prior to RBD, then the special rule applies that the surviving spouse is treated as the owner of the Roth (check IRA agreement) and therefore the minor could get the full stretch.
If this is a real situation, it will probably take awhile to pull the pieces together for H’s IRAs. If his Roth ends up going to the estate, the minor will be hit with the 5 year rule because death occurred prior to the RBD.