RMD Year After Death
Traditional IRA owner and husband died December 2020 at age 86.
IRA owner’s wife, age 84, will rollover the proceeds to her Traditional IRA via spousal rollover in 2021.
Traditional IRA owner wife has already satisfied her 2021 IRA RMD based on the 2020-12-31 balance of her Traditional IRA.
Is the wife required to take an RMD based on the 2020-12-31 balance of deceased husband’s Traditional IRA?
If so, how is the RMD calculated?
Thanks.
Permalink Submitted by Alan - IRA critic on Wed, 2021-02-10 20:04
Since the surviving spouse elected ownership of the inherited IRA after the year of death, she is treated as if she owned the inherited IRA the entire year of 2021. The 12/31/2020 balance on the inherited IRA is used to calculate her 2021 RMD using the Uniform Table. If the wife had not already completed her own 2021 RMD, she could have added the 12/31 balances together and applied the Uniform Table to that balance and that would have resulted in the same total RMD as taking them separately.
Normally, she would have been responsible for completing the 2020 year of death RMD of husband had he not completed it, but due to the 2020 RMD waiver, this is not an issue for 2020 deaths.
If he had any IRA basis in his IRA (Form 8606), she would add the remaining basis to her own IRA by filing Form 8606 and listing the added basis on line 2 of the 8606.
The Dec death probably was too late in the year for her to explore a Roth conversion before year end. A conversion would have been beneficial for two reasons. First there was no RMD already included in taxable income unless the distribution was made regardless, and second, 2020 was the last year they could file a joint return at the lower marginal rates for roughly the same amount of income that will continue after 2020.