IRA question; help needed

Submitted by Fred Shocket on Mon, 2013-09-09 20:22

I have a client who inherited an IRA from her husband years ago and made the inherited IRA a beneficiary account. She is over 70 years old and is taking minimum distributions.

The account is with the American Funds and they suggested I consider moving this account to her name so the distributions would be smaller. She does not need a large amount from the IRA. I accomplished this transfer in August 2013. But I have not taken her required distribution for 2013 yet.

The question is in calculating RMD for her required withdrawal for 2013, do I use the single life table or the standard RMD table.

Thank you for your help.

Fred Shocket, CFP
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Submitted by mk foss on Mon, 2013-09-09 21:00

Apparently you did a spousal rollovr for her in 2013. The custodian (American Funds) would ordinarily distribute the 2013 RMD before processing a rollover. Her 2013 is based on the single life table because the account was an inherited IRA on 12/31/12. Next year’s RMD will be from the uniform table.

Submitted by Alan - IRA critic on Mon, 2013-09-09 21:23

  • I am coming up with a different answer on this one. Per IRS Reg 1.408-8 Q&A 5a, if a sole spousal beneficiary rolls over to their own IRA account (or assumes ownership), the RMD for the year of the rollover is determined as if the survivor owned the IRA the entire year (does not apply to rollovers in the year of the other spouse’s death). Therefore, while the 12/31/2012 balance would be used, the Uniform Table would apply in this case. In the event that an inherited IRA RMD had already been distributed, the excess over the Uniform Table RMD could be rolled back if within 60 days of the distribution.
  • This situation is also reference by Natalie Choate in the following article. See the question re erasing an RMD that is already accrued:  http://www.ataxplan.com/choatesNotes/CNotesV9N1.pdf

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