When Must Surviving Spouse Take Inherited TIRA Dributions

Submitted by Herm Brames on Wed, 2017-10-25 02:15

My sister-in-law’s spouse passed away 1 and a half years ago leaving his spouse as sole beneficiary of his TIRA. He was 62 years at passing and the surviving spouse is currently 64 years old. The local Bank holding the TIRA sent the surviving spouse a distribution in 2016 indicating that it was a required mandatory distribution. Is the bank correct?



Submitted by Alan - IRA critic on Wed, 2017-10-25 02:27

  • NO!  Beneficiary RMDs for sole surviving spouses do not start until the year the deceased spouse would have reached 70.5. Further, IRA custodians are not entitled to just force out distributions without the approval of the IRA owner or beneficiary, so she must have OKed the distribution. In addition, it appears her husband passed in early 2016, and even if the bank did not understand the sole beneficiary rules, the first beneficiary RMD would not have been due until 12/31/2017. Therefore, this bank messed this up on multiple counts. 
  • Even after this distribution, if she had questioned it within 60 days she could have rolled it over to her own IRA which avoids taxes on the distribution and preserves the IRA balance. 
  • Even though she is able to avoid RMDs for 2 years longer by leaving this IRA in inherited form, it might be better to consider rolling this over to her own IRA now so she does not overlook doing this before his age 70.5 year. That would also protect the stretch for HER beneficiaries, which would be lost if she continued to maintain this as inherited after her beneficiary RMDs begin.

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