Spousal Inh IRA – RMD

Submitted by nick sklenar on Fri, 2018-12-14 21:09

Husband died August 2017 at age 50. Wife currently 51, was sole beneficiary of his 401K’s. $250k went to a new T IRA set up in her name. $50k went to a beneficiary IRA titled as Husband (D) FBO Surviving Spouse (B). Death Claims processed Feb 2018.

What are the withdrawal options from the bene IRA for the surviving spouse? If she takes a distribution now she is NOT subject to 10% early w/d penalty, correct?

Does she have to take any w/d prior to when decedent would have turned 70.5?

To do a stretch does there need to be an RMD this year or can it start at 70.5? (or do stretches not apply to surviving spouses, only non-spouses?)

Is there any scenario with the bene IRA that could subject the account to the 5 year rule?

Any help is much appreciated. Thanks!



Submitted by Alan - IRA critic on Sat, 2018-12-15 00:03

  • I assume this was done to give the surviving spouse a source of penalty free distributions prior to 59.5, but apparently the 250k is not expected to be needed until after 59.5. There is no penalty for distributions from the inherited IRA, as they will receive code 4 on the 1099R if she takes a distribution. There is also no RMD that she is required to take out since as sole beneficiary her RMDs do not begin until the year her spouse would have reached 70.5. She will therefore not be subject to the 5 year rule.
  • Since she is about the same age as deceased spouse, she should plan to elect ownership of the inherited IRA upon reaching 59.5, and she could also transfer it into her own IRA at that time. There is no benefit of waiting beyond 59.5 to elect ownership and there are consequences if she waited beyond 70.5 since at that point her RMDs as beneficiary would be considerly more than as owner.

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