Inherited IRA

Submitted by Paul Edmunds on Thu, 2023-08-31 12:40

We have a situation where IRA holder died in November of 2020 at the age of 68 and had not taken any distributions from her IRA account. She named her two adult children (in their 40’s) to each receive 40% of the account and her husband to receive 20%. At the time of her passing the husband was 63. Each beneficiary set up their own inherited IRA including the husband within a short time after her passing. As to the husband, he has not taken any distributions in 2021, 2022 or 2023. Can the husband do a distribution over his lifetime or can he elect at this late date to treat the Inherited IRA as his Ira and delay RMD’s until he is 75? Thank you for your response.



Submitted by Alan - IRA critic on Thu, 2023-08-31 19:25

  • Since separate inherited IRA accounts were estabished by the deadline (12/31/2021), the husband can be treated as the sole beneficiary which would defer beneficiary RMDs until the year deceased spouse would have reached 73, and that also makes husband eligible to elect to assume ownership of his inherited IRA, and he will be treated as the owner for all of 2023. As the owner, the husband’s first RMD year will be 2030, the year in which husband will reach 73, since he was born in 1957. This conclusion regarding sole beneficiary status for a separate account is derived from IRS Reg 1.401(a)(9)-8 QA 2(a)(2).
  • It’s possible that the IRA custodian might reject the conclusion that husband can be treated as the sole beneficiary just by creating the separate account since he was not the sole beneficiary when spouse passed. That would create a situation where husband would have had to take beneficiary (single life table) RMDs in 2021 and 2022, and would also not have defaulted to ownership by failing to do so. To avoid late beneficiary RMDs for 2021-2023 that would not be eligible for rollover, suggest first requesting assumption of ownership from the custodian, and if there is resistance attempting to convince custodian using the above rationale.

Submitted by Paul Edmunds on Fri, 2023-09-01 12:18

Thankyou, Alan

Add new comment

Log in or register to post comments