Spousal IRA RMD hen survivor dies

Submitted by Marta Puzia on Fri, 2018-05-25 15:47

There is a Spousal IRA Account, The surviving spouse dies this year, the beneficial are three daughters. The surving spouse would have been 70.5 years old on December 25, 2018. Since the owner would have been 70.5 going forward the daughters would need to take RMD however for 2018 do they take their mom’s RMD, or their RMD’s or both?



Submitted by Alan - IRA critic on Fri, 2018-05-25 19:37

These situations can be complex, particularly if owner or beneficiary is around age 70. Please advise when the IRA owner passed, and whether it was before or after the owner’s RBD. Also, should it be assumed that the surviving spouse could NOT have defaulted to ownership of the inherited IRA by failing to complete a beneficiary RMD in any year prior to 2018?  This makes all the difference with respect to the stretch for the daughters. However, if the daughters need to take an RMD for 2018, it would be the beneficiary RMD of the surviving spouse. Their own beneficiary RMDs start in 2019, and there will be a large difference depending on whether mother was deemed the owner of the IRA or the beneficiary. Daughters must continue to use mother’s RMD divisors if they are successor beneficiaries, but with a 1.0 reduction.

Submitted by Marta Puzia on Thu, 2018-06-07 16:08

So this was a spousal IRA to begin with (not sure if that makes any difference) and 1st decesed spouse would have turn 70.5 this year on 12/25/2018 the second decease spouse was older and was not taking the RMD since it was allowed to used the younger 1st deceased spouse age. So yes mother was demmed the beneficiary from the begining. Also just to clarify if the daughter don’t need to take the distributions now they can wait until 2019 and take their onw RMDs? 

Submitted by Alan - IRA critic on Thu, 2018-06-07 17:48

  1. This fact pattern is likely to get many different answers. First, the owner passed prior to his RBD and mother was the sole beneficiary and her beneficiary RMDs did not need to begin until 12/31/2018, the year the owner would have reached 70.5.
  2. Mother, who is older than her husband then passed earlier in 2018. Per Reg 1.401(a)(9)-3 Q 5, for purposes of her beneficiaries RMDs (but not her own RMD) she is treated as the owner of the inherited IRA but with HER date of death. Because this Reg does not apply to determine OWNERS RMDs and only applies to beneficiaries, there is no 2018 RMD required from anyone. Also see Pub 590 B, p 9.
  3. Since mother is treated as the owner for purposes of her beneficiaries, the 3 daughters are treated as designated beneficiaries and not successor beneficiaries. They can create separate inherited IRA accounts by 12/31/2019 and each can use their own age as of 12/31/2019 to determine their Table I beneficiary RMDs starting in 2019. 
  4. Generally, their inherited IRAs should be titled showing “(their name) as beneficiary of (mother)”.

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