death rollover
Client had IRA annuity. He died, spouse took death benefit and put it into her checking account. He died 9/5/08, claim paid 10/8 and check cleared 10/16/08. Can she use the 60 day rollover and put these funds into an IRA in her name?
Client had IRA annuity. He died, spouse took death benefit and put it into her checking account. He died 9/5/08, claim paid 10/8 and check cleared 10/16/08. Can she use the 60 day rollover and put these funds into an IRA in her name?
Permalink Submitted by Alan Spross on Fri, 2008-10-31 21:26
Yes. She has 60 days from the date of receipt.
Permalink Submitted by Janet Devine on Sat, 2008-11-01 13:53
Thank you. That is what I thought too. Her accountant told her that she would have to report this as taxable income and pay all taxes due this coming year. The deceased spouse was 70 1/2 Sept. 2007 and had taken that year’s RMD but not yet taken his 2008. Will the surviving spouse need to take the 2008 RMD before 12/31/08 and will it be based the deceased’s age (71) not the surviving spouse (68)? Will she continue taking RMDs based on his age or based on her age?
Thank you again.
Permalink Submitted by Alan Spross on Sat, 2008-11-01 19:59
Since the decedent passed after his RBD, the RMD for 2008 will be based on the decedent’s age of 71 using Table III – the divisor is 26.5 applied to the 12/31/07 fair market value. Since this was an IRA annuity, there may be some actuarial benefits that need to be included in the 12/31/07 account value. Therefore, that value will have to be provided by the insurance company in order to determine the 2008 RMD. The RMD as determined should not be rolled over to the surviving spouse’s IRA, and accordingly that RMD will be taxable in 2008. Starting in 2009, the surviving spouse’s age will determine future RMDs.
But the statement that the entire distribution is taxable suggests that a new accountant should be considered. Of course, the client may also have misunderstood the accountant.