Spouse Inherited IRA post RBD

Submitted by Mhotchkiss on Tue, 2017-11-14 16:02

Husband was 82 and died in 2016. Spouse (age79 in 2016) was sole beneficiary. TIRA was placed in Beneficiary IRA status by custodian. Decedent’s RMD was not taken until Jan. 2017. (Assume a 5329 should be filed?) In Jan. 2017 Bene IRA was assumed as Wife’s own IRA. Question – will spouse have a bene RMD to take in 2017 based on year end 2016 value of bene IRA? How does her own RMD work for 2017? (she had other TIRA money end of 2016). -m



Submitted by Alan - IRA critic on Tue, 2017-11-14 18:03

Yes, a 5329 should be filed for 2016 due to the year of death RMD being completed late. Penalty waiver in this situation is almost automatic.  For 2017 she is assumed to have owned the IRA for the entire year so would use the Uniform Table with her age at end of 2017 for the divisor. The beneficiary account balance on 12/31/2016 would be used to determine that RMD, but under the IRA aggregation rules she could satisfy her RMD for the former inherited account from any of her other owned IRA accounts.

Submitted by [email protected] on Tue, 2017-11-14 19:43

Table 1 on the inherited IRA RMD?  Thanks for the help. -m

Submitted by Alan - IRA critic on Tue, 2017-11-14 20:27

2017 RMD will be calculated from the Uniform Table. Per IRS Reg 1.408-8 Q 5, the surviving spouse is treated as if they owned the account the entire year. This rule does not apply to the year of death RMD which is calculated using the Uniform Table and decedent’s age.

Submitted by [email protected] on Wed, 2017-11-15 01:48

Alan, you said “The beneficiary account balance on 12/31/2016 would be used to determine that RMD,” so, I thought that meant that she needed to take her BeneIRA RMD in 2017 based on 2016 values.  Since that would be a BeneIRA RMD, wouldn’t that be Table 1?  I understand her own IRA RMD for 2017 would use Uniform Table. – m

Submitted by Alan - IRA critic on Wed, 2017-11-15 03:42

  • The account was still in beneficiary form on 12/31/2016, but that account balance is used to determine the RMD for 2017 using the Uniform Table.  That would also be the case if the beneficiary IRA was rolled over to another existing owned IRA anytime in 2017.
  • The year of death RMD for 2016 whether taken by the decedent or by the beneficiary later on is of course the decedent’s already calculated RMD for 2016 using the Uniform Table and the 12/31/2015 balance.
  • That means that Table I would not be used to this account or balance if rolled into another owned IRA. But if the inherited IRA was left in place, the RMD for 2017 would be that of an inherited IRA using Table I. There is also the possibility that the inherited IRA was just forgotten altogether and NO distribution is taken in 2017. In that case the default rule would treat the surviving spouse as the owner because they failed to complete the beneficiary RMD for 2017. The 2017 RMD delinquency would then become that of an owner, so back to the Uniform Table to determine the 2017 RMD. That RMD was still missed, but the delinquent amount is reduced as it becomes a Uniform Table delinquent amount rather than a Table I delinquent amount. Sometimes this default rule saves the stretch for the next beneficiary (if surviving spouse named one) since it makes that surviving spouse the owner and the named beneficiary of the surviving spouse becomes a designated beneficiary rather than just a successor beneficiary and gets a life expectancy stretch.

Submitted by [email protected] on Wed, 2017-11-15 14:02

ok.  thanks.  very helpful. -m

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