Inherited IRA RMD calculated on whose life expectancy
I have a client who made his deceased spouse’s IRA an Inherited IRA. He named his three children as beneficiaries of the Inherited IRA. He now passes away. The three childtren inherit the Inherited IRA. Does the RMD calculation continue with the Inherited IRA (his age minus one)or can the children use their own ages? I think I’ve read something about once the Inherited IRA gets to a certain point, you can no longer use the beneficiaries’ ages. Help!
Permalink Submitted by Alan - IRA critic on Thu, 2013-02-07 19:50
That is correct. The successor beneficiaries lose the ability to use their own life expectancy if the surviving spouse passes with an inherited IRA that is subject to inherited IRA RMDs that she is taking. To determine if that is the case here, would need to know what age the original IRA owner was when she passed, and therefore when the survivor became subject to RMDs. Also, there is always the possibility that the surviving spouse fails to take the RMD required as beneficiary and then becomes default owner of the IRA by doing nothing, and that can result in the successor beneficiaries becoming designated beneficiaries. Some sole surviving spouse’s have unknowingly made themselves owner of the IRA.