Spouse receives check for her deceased husband’s IRA

Submitted by Delia Fernandez on Tue, 2023-08-22 21:54

Husband died in May 2023, after his RBD, but before he took his 2023 RMD. Had an IRA at Chase with $11,415, and Chase refused to open a spousal or beneficiary IRA for the spouse because the account was under $100,000. Instead, they issued her a check made out to “Jane Smith, beneficiary of John Smith.”

Her credit union thought they could help her, but now is saying they have a problem because he didn’t take his 2023 RMD. I reached out to TD Ameritrade, my custodian, and they said they thought they would allow her to open an account, but will have to wait until after Labor Day because of the TD Ameritrade/Schwab merger.

My questions: Have you ever seen this? And is the check in good order for her to open a spousal IRA? She’s 68, doesn’t need the money, so would prefer to open a spousal IRA in her own name.

TIA for your help.



Submitted by David Mertz on Tue, 2023-08-22 22:38

  • There is nothing unusual about this other than the assertion that Chase would not accommodate an IRA of less than $100,000; seems like there might have been some misunderstanding there.  At age 68 there is no reason to have opened a beneficiary IRA, so Chase should have accommodated a trustee-to-trustee (Chase-to-Chase) transfer to an IRA of her own.
  • The check payable to Jane Smith includes the husband’s 2023 RMD, so only the portion in excess of the RMD is eligible for rollover to an IRA of her own at any IRA custodian within 60 days of receipt of the distribution.  An amount equal to the RMD needs to be deposited into a nonqualified account and only the remainder can be deposited into the IRA as a 60-day rollover.  If the financial institution has a problem with splitting the deposit of the check into two different accounts, the entire check can be deposited into a nonqualified account and then the amount in excess of the RMD can be moved to the IRA as a rollover.  This rollover will count toward the one-rollover per-12-months limitation.
  • She could also convert to a Roth IRA the amount in excess of the RMD if she wants to pay the taxes now for the benefit of future tax-free growth and no annual RMDs even after she reached age 73.

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