RMD on Spousal Continuation of Traditional IRA
I have a client who wife just passed away. She has an Indexed Annuity in her Traditional IRA. Distributions were being taken (currently suspended due to death) with an income for life, income rider.
In the past the distributions from the income satisfied the Required Minimum Distributions (RMD).
The RMD for 2018 has not been satisfied yet, she passes in February,2018.
The husband (primary beneficiary) plans to use the spousal continuation feature and continue distributions from this IRA once he becomes the owner and annuitant, using the income rider.
SHould he satisfy the RMD prior to becoming to new owner using a spousal IRA rollover? Or see if the RMD is satisfied once income payments restart with the Husband as new owner of the IRA and annuitu within.
Thank you.
Permalink Submitted by Alan - IRA critic on Fri, 2018-03-09 00:24
He would first file the death certificate and other paperwork required to retitle as beneficiary. The 2018 year of death RMD will be the same as if the wife lived, however the husband can elect to be treated as the owner right after the beneficiary papers are filed. The ownership RMD will be calculated using the husband’s age for 2019, but as an annuity with fringe benefits the actual RMD for this account needs to be calculated by the insurance company, just as when the wife lived. The value of certain fringe benefits may or may not change the RMD amount from that of an ordinary account. Starting in 2019, the husband could aggregate the RMDs if he also has other IRAs of his own, but would still need to ask the insurance company what the RMD will be for the annuity contract.