Inherited IRA
If a spouse inherits an IRA from their deceased spouse and the IRA was incorrectly titled as an inherited IRA instead of a spousal IRA rollover, would the surviving child’s RMD’s be based on the parent’s date of birth or the child’s after the surviving spouse passes away? If the rmd’s are based on the parents date of birth are there any ways to correct it?
Thank you
Permalink Submitted by Alan - IRA critic on Fri, 2017-06-23 23:38
It depends. A surviving spouse may wish to keep the inherited IRA in inherited form, particularly if they are not yet 59.5. If so, they can roll it over to their own account anytime they wish. If the surviving spouse passes before 12/31 of the year that their beneficiary RMDs must begin, they are treated as the owner and the child beneficiary as a designated beneficiary who can use their own life expectancy for RMDs even if the IRA is still titled as inherited. This deemed ownership also occurs by default if a sole surviving spouse beneficiary fails to take their full beneficiary RMD in any year. Otherwise, if the surviving spouse is subject to RMDs and takes them in time, then their child is treated as a successor beneficiary who must continue the RMD schedule of the surviving spouse. Therefore, whenever a surviving spouse passes with an inherited IRA from a spouse, it must be determined if they are yet subject to RMDs and have taken those RMDs when determining what RMD schedule the child must use.