Spousal Inherited IRA

Submitted by Ryan Smith on Thu, 2019-05-02 14:09

I have a client that passed away April 15, 2019. His wife who turns 70.5 this year is his beneficiary of his IRAs (she has not taken her distribution yet). He was 78 and his 2019 RMD was $25,000. I know she has to withdrawal this before she does anything. A few questions.
1. Does his 2019 RMD have to be in her SS number for tax reporting or can it be in his?
2. Does she need to keep her IRA separate because she has an RMD starting this year?
3. Because she is younger can she assume the IRA and in 2020 use her younger age for the RMD for all the IRAs (his and hers)?

I’m struggling with her start date, her taking it over as hers and the timing of the RMDs and calculations. Ideally we would just have it all as one IRA instead of multiple ones. Thanks.



Submitted by Alan - IRA critic on Thu, 2019-05-02 20:32

  • The first thing she should do is submit the death cert and other required papers with an election to assume ownership of the inherited IRA. She will then have her own IRA under her SSN. She then has until year end to complete the year of death RMD of 25000.  It will be reported on a 1099R under her SSN and she will have to report it as income. In 2020, her RMD will be based on her age attained in 2020 and the Uniform table, therefore her 2020 RMD will be less than her husband’s due to being younger. 
  • Proceeding as above will avoid any rollover which is subject to the one rollover limitation. 
  • No need to keep the inherited IRA separate. She can and should assume ownership ASAP since there is no benefit of maintaining an inherited IRA and there are drawbacks.
  • Your Q 3 – yes her RMD will drop in 2020, but since she now owns the IRA, there is only HER RMD. His year of death RMD will be completed this year, but still reported to her under her SSN.
  • Under assumption of ownership there is no distribution and rollover, and no 1099R for the change of owner. However, there will be a 1099R to report the 25000 year of death RMD distribution.
  • She should determine if he had any IRA basis (Form 8606) in his IRA. If so, she inherits that basis and will be continuing to report distributions on Form 8606.
  • Finally, she should name her own beneficiary ASAP. Too many time people forget with serious negative consequences.

Submitted by Ryan Smith on Fri, 2019-05-03 17:31

Wonderful answer thanks so much! 

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