Which RMD table to use
Dad died Nov of 2021. The TSP did not send the last few RMD monthly distributions as we reported his death to them, and they just sent the remaining RMD for my deceased father to my mom in January. She claimed the TSP account as her own and they have a Dec 2021 value. I see conflicting answers as to which RMD table she will use to calculate her RMD for 2022. Please help! Thank you!
Permalink Submitted by Alan - IRA critic on Wed, 2022-02-02 18:35
Did mom have her own TSP account? If so the inherited TSP could be rolled into her own TSP and her 2022 RMD would be calculated using the Uniform Table. But if she did not have her own TSP, then the inherited TSP from Dad would be referred to as “beneficiary distribution account”, and her 2022 RMD would be calculated using the single life table.
She could also have rolled the inherited TSP into her own IRA, and the Uniform Table would then apply. Please clarify exactly what type of account she now has. As an owner her RMD will be lower than unless Dad was much younger. It would help to know the ages of both of them at the end of 2021.
As for the remainder of Dad’s 2021 RMD, Mom became responsible for completing it in 2021, but for late year deaths it is normal that this does not get done until the following year. In that case, their final joint tax return should include a Form 5329 requesting waiver of the penalty for the 2021 RMD being late. The IRS will always grant the waiver in this situation.
Permalink Submitted by Mindy Reineke on Thu, 2022-02-03 21:40
TSP rolled dad’s account into an account for her at TSP. ( They did not ask her if she wanted to open up her own IRA) So, her 2022 RMD now will use the Single LIfe Table. Her RMD will be so much higher than his was last year. (He was 86 when he died – she will turn 86 in a few weeks) Or, she could roll her TSP account into her own IRA, then she could use the Uniform table? If she moves it into her IRA, TSP will send her the 2022 RMD before they do a custodian to custodian transfer. So, in a nutshell, it would be better for her to mimimize her RMDs starting in 2023 ( as she does not need the money) by moving it onto her own IRA, correct?
Permalink Submitted by Alan - IRA critic on Thu, 2022-02-03 22:44
Yes, that is correct. There is no way to avoid the higher 2022 single life table RMD, but her IRA RMDs in future years will be lower with the Uniform Table. The technical term for the TSP to IRA rollover is “direct rollover”. She will get a 1099R for the direct rollover and another 1099R for the RMD distributions for 2021 and 2022.