Spousal Beneficiary IRA
Spouse ( age 56) of her recently deceased husband wants to start taking monthly distributions from her husband’s IRA (who was 61 when he died and was taking distributions).
Confirming:
that she should retitle the deceased husband’s IRA as a spousal beneficiary IRA, to avoid the10% penalty…
that she is not required to take distributions from this IRA as a spouse…
and, that she can transfer this beneficiary IRA into her own IRA at any time….most likely waiting until 59 1/2
Permalink Submitted by Alan - IRA critic on Thu, 2021-12-02 14:12
That is correct. She will have no beneficiary RMDs until the year husband would have reached 72 and by that time she should assume ownership of the inherited IRA. Her own RMDs would then begin when she reaches 72.
Permalink Submitted by Peter Tobin on Fri, 2021-12-03 09:50
Deceased Spouse 59 and Beneficiary Spouse 77. Company 401k retirement plan at one company, Pension Plan and seperate Retirement Plan at another company. Desire to delay Beneficiary Spouse RMD’s until Spouse would have been 72. All plans now in Beneficiary Spouse’s name. How ensure no issue with RMD. (Pages 202-205 of ESRS..Time Bomb)
Permalink Submitted by Alan - IRA critic on Fri, 2021-12-03 15:56
The tax code is very clear that a sole beneficiary spouse is not required to start RMDs until the year the deceased spouse would have reached 72. In this case, the beneficiary spouse would then be 90, so this would concentrate taxable income and taxes into a very few years, although it would also result in more of the balance remaining for the beneficiaries of the surviving spouse.
At age 90 the surviving spouse should do a spousal rollover to their own IRA to reduce future RMDs by using the Uniform Table. When surviving spouse passes, either before 90 or after, the 10 year rule will apply. There is also a chance that the employer plans might require a lump sum distribution for the beneficiary of the surviving spouse, which is another reason to do the spousal rollover to an IRA at age 90 to eliminate the chance of that happening.
It is a good idea that the surviving spouse clarify with the employer plans that distributions are not needed and the intent is to delay RMDs until spouse would have reached 72. This will reduce the chance that a plan would mess up and distribute an RMD incorrectly.
Permalink Submitted by Peter Tobin on Fri, 2021-12-03 19:37
Can ANY distribution be made from ‘that’ Deceased Spouse’s plan OR would that trigger future RMD’s being required from that plan? One such plan is a) 401k employer $725k b) Pension $135k c) 401k $16k.
Permalink Submitted by Peter Tobin on Fri, 2021-12-03 19:48
Deceased Spouse retirement accounts – required by plan – ‘to be rolled over to an Inherited IRA’: Require an RMD by Beneficiary Spouse (77) – a) beginning in year ‘after’ the “funding of the Inherited IRA because no balance existed at prior 12/31 Correct? b) would be based on Uniform Life Expectancy Table age of Beneficiary Spouse Correct?PS: Thank you. ED’s ‘Time Bomb’ helps but the insight of a professional – in this area – is sincerely appreciated.