Sole Beneficiary and the RMD implications
A client passed away before turning 70.5 (would have been 70.5 on 12/09/18) and his wife, who is 72, will be treating the assets as her own. Advisor wanted to know if they have the option to wait until the beginning of 2019 to move the assets into her own IRA, so the amount held in Donald’s account will not be included in her 2019 RMD calculation. Can we confirm if this is an option for the client, or if they has to move the assets over before then?
I’m thinking the wife would still need to factor in the 12/31/18 value of the husband’s account when calculating the 2019 RMD for her.
Permalink Submitted by Alan - IRA critic on Mon, 2018-10-22 20:26
Yes, you are basically correct. The client passed before their RBD and therefore does not have an RMD for 2018. His wife can elect ownership of the inherited IRA either this year or next year and her RMD implications are the same either way. If she elects ownership this year, there is still no RMD for 2018. If she waits until next year she is treated as being the owner for the entire year 2019 and her RMD on this balance will be calculated using her age at the end of 2019 and the inherited IRA balance on 12/31/2018. Therefore, there is no reason to wait before electing ownership. Ref IRS Reg 1.408-8, QA 5.