Spousal IRA Rollover – RMD

Submitted by Sandra Owens on Wed, 2015-03-25 19:22

The client died on 12/30/14 but the children did not report it to the financial advisor until March 2015. The client had a monthly withdraw set up on the account so funds continued be withdrawn for 3 months after her death. Beneficiaries on the account are the clients 3 children (equally). The RMD for 2015 has not been met. Do I split the remaining balance due equally between the beneficiaries? Does the RMD have to be completed before the spousal account is distributed equally between the children (into Inherited IRA)’s).



Submitted by Alan - IRA critic on Wed, 2015-03-25 20:53

  • Distributions were transferred directly into decedent’s bank account?  If so, any distributions done after the DOD should be returned to the IRA custodian because the estate is not entitled to receive these distributions. The beneficiaries need to establish inherited IRAs and then they must receive their RMDs for 2015 by 12/31/2015. Each beneficiary’s 2015 RMD should be calculated using 1/3 of the decedent’s 12/31/2014 IRA balance. You did not mention any shortfall in the decedent’s year of death RMD, but if there was a shortfall, the beneficiaries must make up the shortfall. All distributions in 2015 should be paid to the beneficiaries and reported on a 1099R under their respective SSNs. Either the incomplete 2014 RMD or any 2015 RMDs do not have to be completed before separate accounts are established. The IRA custodian should be contacted with respect to correcting the issues caused by the post death distributions. Hopefully, they have encountered this issue before.
  • Not sure what you meant by spousal IRA. Was this IRA owned by the decedent, or was it maintained as an inherited IRA from their spouse? This has major RMD implications for the beneficiaries.


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