RMD Calculation when beneficiary changes mid-year

Submitted by Philip Andriola on Mon, 2014-11-24 00:58

An 83 year old IRA owner is 10 years older than his wife, and has named his children from a previous marriage as his IRA beneficiaries. During the year, November for example, he changes the beneficiary to his wife. What calculation should be used for his RMD? The IRS RMD worksheet states that the beneficiary on January 1 governs the calculation. Is this correct? Can this IRA owner change beneficiaries each year before and after taking his RMD so as to get the benefit of the joint life calculation? I would assume “no” and that there must be some “governing date” each year for the calculation. Can anyone shed light on this?



Submitted by Alan - IRA critic on Mon, 2014-11-24 03:09

  • The January 1st beneficiary determines the status for the entire year, except if the IRA owner is granted a divorce and in that case, his spouse would not be considered the SOLE beneficiary, and the Uniform Table would always apply.
  • Note that use of Table II requires the sole beneficiary spouse as of Jan 1st to be MORE than 10 years younger than the owner. If the IRA owner is 10 years older on their respective birthdays in a year, the Uniform Table applies, not Table II.
  • Should the IRA owner change a sole spousal beneficiary on Jan 1 more than 10 years younger to a different beneficiary after Jan 1, Table II would apply to the RMD calculation. There is no requirement for maintaining the spouse as beneficiary for any length of time, so the IRA owner could actually just make sure the spouse was listed as the sole beneficiary on 1/1, change it a couple days later to a different beneficiary and still use Table II for RMDs. The beneficiary could be changed back to the spouse the last week of December, and the process could be repeated every year. Never heard of someone actually doing this, but they could.

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