Younger spouse dies before RMD

Spouse age 67 dies; wife is 81; she is beneficiary of his IRA; how should it be treated?



She has the option to treat the IRA as inherited and will not have RMDs until the year the spouse would have reached 72. If she will benefit from delaying RMDs she might consider this and only elect to assume ownership in the year deceased spouse would have reached 72.
However, if she will need to take distributions anyway, she could assume ownership now instead of later. Her RMDs will be based on the Uniform Table, resulting in an RMD of about 5.4% of the account value. If she does not need that much she might maintain the IRA has inherited until the year spouse would have reached 72.
She could also roll over a portion to her own IRA now and maintain the rest as an inherited IRA not yet subject to RMDs. However, this plan would likely result in confusion from having two IRAs, one owned and subject to RMDs, and the other inherited and not yet subject to RMDs.

Thank you.  If she selects the first bullet point, when distributions start at his age 72, are the distributions based on the Uniform Table his life span or hers?

If she continues with the IRA as inherited, her beneficiary RMDs are calculated from the single life table using her attained age. Since single life table RMDs using the beneficiary’s age are always higher than Uniform Table RMDs, she should elect to assume ownership in his age 72 year before she takes any distributions in that year or later.

Great point, Many thanks.

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