another RMD question
74 year old IRA owner died August 2010. The 2010 RMD was paid by the Estate (after death but before 12/31/2010) based on 12/31/2009 balance.The account was rolled over by the deceaseds spouse (age 73) in March 2011 to a rollover IRA in her name. Question-who pays the 2011 RMD which is based on the 12/31/2010 value? Should it have been paid before the rollover to spouse?Since it is still 2011 can this be remedied if not done correctly?
Permalink Submitted by Alan Spross on Wed, 2011-11-16 21:10
The RMD does not have to be taken prior to the rollover. When a surviving spouse rolls over an inherited IRA to their own IRA in any year AFTER the year of their spouse’s death, they are treated as the IRA owner for the entire year, and the RMD can be aggregated with any other IRAs the surviving spouse owns. This is addressed in IRA Reg 1.408-8, Q&A 5.
This regulation is not very clear with respect to the account value that should be used, but the only logical value to use would be the 12/31 balance in the year prior to the rollover.
If the estate was the actual beneficiary of the IRA and the surviving spouse was the sole beneficiary and executor of the estate (or sometimes just one of the two), the IRS has consistently allowed the surviving spouse to roll over the IRA. However, many IRA custodians would not do this without a PLR approved by the IRS. Therefore, your question has the additional issue of an estate beneficiary.
Permalink Submitted by Burt Moss on Wed, 2011-11-16 23:10
Thank you for the help!