Client died in 2021. Had 3 IRAs, all with his spouse as beneficiary. 2 of the IRA sponsors withheld RMD’s on the husband prior to transferring the account to spouses name. the third IRA sponsor did not.
Which is correct? Should the RMD have been taken when the distribution is in the year of death going to a spousal beneficiary?
Thanks.
I’m confused. Spouse will eventually be responsible for completing RMD, but no RMD should be distributed. Are you saying no RMD is required prior to the rollover, but the spouse is still responsible for the RMD prior to the end of the year? And if that’s the case, is the RMD on the decedent’s life or the spouse’s life?Thanks.
Yes, spouse will need to take the year of death RMD by year end, but the custodian should not force out an RMD prior to a non reportable transfer. Another reason for that is the RMD aggregation rules and a particular custodian will not know if the decedent completed their total RMD from another IRA account, or if the beneficiary completed the year of death RMD from another inherited IRA or assumed IRA from the same decedent.
The year of death RMD is the same as the decedent would have had to take for that year using IRA RMD aggregation rules if they owned more than one IRA account. The age of decedent is not a factor.
Of course, if the survivor took a distribution and did the spousal rollover as an actual 60 day rollover, the RMD for that specific account is not eligible for rollover, so spouse could only roll over the balance of the distribution.
I think the spouse probably handled transfer of these accounts differently, which might explain why only the third sponsor did not distribute a year of death RMD.
Permalink Submitted by Alan - IRA critic on Tue, 2021-06-01 19:58
The surviving spouse will eventually be responsible for completing the decedent’s 2021 RMD, but in the process of doing the spousal rollover, there should be no RMD distributed unless the spouse received a reportable distribution. Electing to assume ownership or transfer to an inherited IRA are not reportable distributions, therefore no RMD should be distributed. Exactly, what actions were taken by the surviving spouse for each inherited IRA? Perhaps the 3rd IRA was handled differently than the others.