Second Inheritor Spouse
Hello,
I have some questions about this scenario……Bob and Mary have a son, Steve. Bob passes away and leaves his assets to his son Steve…..a few years later, Steve passes away and he named his still living mother, Mary, as the beneficiary.
Mary is the second inheritor of the assets, but her relationship to the original depositor was spousal. Does Mary get spousal benefits such as “treat as your own” option and “eligible designated bene” status (as it relates to the SECURE Act) because she inherited funds that were originally her husband’s?
Or because her son inherited the assets first, does she lose the spousal options?
Any insight would be greatly appreciated. Thank you.
Permalink Submitted by Alan - IRA critic on Mon, 2022-07-25 18:36
The latter. An IRA must be inherited by a spouse as the designated beneficiary to do a spousal rollover. A successor beneficiary is never treated as a designated beneficiary and therefore cannot be an EDB either. If Steve was stretching the IRA as a pre Secure Act beneficiary, Mary will be subject to the 10 year rule if Steve passed after 2019. Moreover, if Bob passed after his RBD, per proposed Secure Act Regs (not yet final), Mary would have to continue Steve’s RMD schedule for years 1-9 of the 10 year period. Mary’s exact RMD requirements are dependent on some specific dates of each death, but in no way could she be an EDB or do a spousal rollover.