Final Dist of Inherited IRA titled as spouse beneficiary

Submitted by David Castelli on Thu, 2016-02-11 22:27

The wife inherited her husbands IRA and titled as Spouse Beneficiary with her beneficiaries her children. He was taking MRD. Wife died 3 months later in same year, 2015

My question is can’t the children split the IRA into separate inherited IRA’s by Dec 31 2016 and now use their life expectancy for RMD?

the bank is saying they have to continue to use the Spouse life expectancy for RMD.

Who is correct?

Thank you

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Permalink Submitted by Alan - IRA critic on Fri, 2016-02-12 01:26

The bank is correct. Wife should have rolled this over to her own IRA so that the children could be considered designated beneficiaries rather than successor beneficiaries. The children do not get their own stretch and will all have to use the remaining life expectancy of their mother for RMDs. Had husband named the children as contingent beneficiaries on his IRA? If so, and 9 months since wife’s death has not yet passed, her executor might be able to disclaim on her behalf and the IRA would instead pass to the children.

Permalink Submitted by Bruce Steiner on Fri, 2016-02-12 16:49

Alan raises a good point, to check to see whether the children are H’s contingent beneficiaries. Note that in some states a disclaimer by an executor requires court approval, so make sure to allow sufficient time for the disclaimer.