Spousal Inherited IRA
Hello All –
I know this has been asked before, but I do not know how to search & filter this forum for previously asked questions. Maybe someone does?
Wife (age 81) died Dec 2016. She had already taken her 2016 RMD, Husband (age 84) is 100% beneficiary and deciding whether to roll IRA to his own or remain as a beneficiary. If the deceased’s spouses IRA is rolled to him, I understand he must take RMD’s based on his life expectancy. However, if he remains as a beneficiary, he can take the RMD’s over her remaining life expectancy subtracted by 1 each year….correct? Would this be considered mainly if he wants to minimize RMD’s? Am I missing anything else?
Thanks in advance.
Jay
Permalink Submitted by Alan - IRA critic on Mon, 2017-01-16 16:51
If he rolls the IRA over to his own IRA, his RMDs will be much lower than if he remains as beneficiary. This is due to the Uniform Table producing lower RMDs than the single life table used by beneficiaries. Another reason not to continue as beneficiary is that the beneficiary he names will not get a new stretch upon his death because his beneficiary will only be a successor beneficiary unless he owns the IRA when he passes. Therefore, he should roll this over or assume ownership ASAP.
Permalink Submitted by [email protected] on Mon, 2017-01-16 18:05
Understood…thank you.As a follow up…..this surviving spouse has 6 children. If children are equal 1/6 beneficiaries….is it correct that upon this surviving spouses death, the stretch will be based on the oldest beneficiaries life expectency? If true, I believe the only way to avoid this is to split his IRA into six separate IRA’s. Yes?
Permalink Submitted by Alan - IRA critic on Mon, 2017-01-16 18:18
Yes, the separate inherited IRA accounts must be created no later than the end of the year following the year of the IRA owner’s death. Then each of the 6 will use their own life expectancies for RMDs and will each have complete control of their own inherited IRA. Without separate accounts the age of the oldest beneficiary would be used for all of them. Again, this assumes the surviving spouse has assumed ownership of his inherited IRA.