Spouse never moved IRA into his name

Submitted by Samuel Wishneff on Fri, 2022-12-16 15:49

We have a client that was the beneficiary on his wifes account. His wife passed away in 2019 and he never moved the account into his name. What, if anything, are the ramifications of him not doing this? As the spouse, will he simply move the IRA money into his own name and call it a day?

Thanks!



Submitted by Alan - IRA critic on Fri, 2022-12-16 15:58

He could do so, but may already have defaulted into ownership by failing to take any beneficiary RMD required in 2021. What were both their ages at the end of 2019?



Submitted by Samuel Wishneff on Fri, 2022-12-16 17:14

Sorry, I jumped the gun a bit before having all of the information.  The client did in fact have the account moved into his name, however rather than taking advantage of the spousal IRA, the funds got moved into a beneficiary designated IRA.  We dont know if this was a mistake by the custodian or the client.  The client has never taken funds from the account even though it is titled as BDA.  This was all before the secure act changes and neither have/had reached RMD age.  



Submitted by Alan - IRA critic on Fri, 2022-12-16 19:11

  • Client could not have defaulted into ownership unless a beneficiary RMD was required that client did not complete, However, the client has no beneficiary RMDs due until the year his wife would have reached age 70.5 if she was born prior to 7/1/1949 or 72 if she was born after 6/30/1949. Nonetheless, if he did not default into ownership he can simply advise the inherited IRA Custodian that he is electing to assume ownership. If he does that this year, his RMD this year will come from the Uniform Table as the owner, and will be less than his beneficiary RMD if he is required to take one.
  • Some terminology issues – A BDA account is titled to show the beneficial owner (client) and the name of the decedent, but is also described as being in the name of the decedent. Both names must be shown, but it is still referred to as being in the name of the decedent. Client can elect ownership anytime under existing rules, but after either defaulting to ownership or specifically electing it, the account can never return to inherited status. 
  • Even if client defaulted to ownership, he should still have the account retitled as the owner and decedent’s name will be removed. This is usually done by the custodian transferring the balance to a new owned IRA account.


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