Spousal beneficiary IRA partial transfer to spouse’s IRA
I have a 47-year-old client for whom we recently established a beneficiary IRA for her deceased husband’s accounts. She wants to move some of this to a variable annuity with a living benefit to guarantee lifetime income, starting at age 60. The annuity company will not establish a beneficiary IRA with the living benefit. To accomplish this, we want to take SOME of the money from the beneficiary IRA, but not ALL of it, and roll it into a traditional IRA for her, leaving plenty in the beneficiary IRA to carry her until age 60. I have never done a partial rollover from a spousal beneficiary IRA to the spouse’s traditional IRA. Can it be processed as an IRA transfer, from the beneficiary IRA to her IRA? Would it be best (i.e. “cleaner”) to set up a traditional IRA with the current custodian, transfer internally, then do a traditional IRA transfer from the new traditional IRA to the VA company? I am concerned that one or both of the companies may code the transfer incorrectly. Are there any problems with this?
Permalink Submitted by Alan Spross on Fri, 2010-08-06 23:18
Tom,
This should pose no problem. The spousal rollover can be done either by a direct trustee transfer OR by a 60 day indirect rollover to her own IRA. There is no need to set up any additional IRA accounts other than the new spousal rollover IRA.
There would be no RMDs required from the inherited IRA until her deceased spouse would have reached 70.5, so at some point she may need to take RMDs based on the prior year end balance in the inherited IRA.