Spousal beneficiary

Submitted by Shirley Klupchak on Tue, 2023-11-28 20:36

Husband age 91 passed away Dec 2022.
Beneficiaries of his traditional IRA were $60000 to church and remainder to spouse, age 89
Custodian’s RMD for spouse was calculated using ONLY the spouses IRA balance in Feb 2023.
Spouse is treating husband’s IRA as her own and this amount was transferred to her March 2023 and added to her existing traditional IRA account. Should the custodian recompute the RMD for 2023? Should there be an adjustment to the 12.31.22 balance for the amount transferred to the church? I assume that the RMD will be calculated using the spouse’s single life expectancy.



Submitted by Shirley Klupchak on Tue, 2023-11-28 21:15

Is it possible that the amount transferred to the church qualifies as a qualified charitable distribution?

Submitted by Alan - IRA critic on Tue, 2023-11-28 21:44

  • The church inherited their amount directly, did not receive it as a QCD.
  • When was the church paid their 60,000?
  • The spouse’s IRA balance for 2022 RMD purposes is the 12/31/2022 balance less 60,000.
  • If a distribution from the inherited IRA was made to the spouse, her 2023 RMD is calculated from the single life table. However, if the church was paid off and then the spouse assumed ownership of the inherited IRA before a distribution was made, her 2023 RMD would be from the Uniform Table as she is treated as owning the IRA for the entire year.
  • Therefore, with the correct timing of these events the spouse’s RMD would be much lower using the Uniform Table. But if a distribution was made from the inherited IRA, the single life table applies for 2023.  The Uniform Table would be used thereafter.

Submitted by Shirley Klupchak on Thu, 2023-11-30 18:35

I think that the church received their share in March 2023 but I have asked for the statements and have not yet received them.   The custodian says that by distributing the church’s share that the spouse’s RMD for 2023 for the deceased taxpayer’s IRA balance has been satisfied.    Does this make sense?  No distributions have been made from the spouse’s IRA; simply the receipt of the balance of the husband’s T-IRA.If I understand you correctly the Uniform Table should be used for computing the RMD in 2024 and going forward.

Submitted by Alan - IRA critic on Thu, 2023-11-30 18:52

  • If the custodian improperly handled the creation of separate inherited IRA accounts by not adjusting the pecuniary amount for gains or losses post death, I don’t know what the solution is because not only are the separate accounts not recognized as such for RMD purposes, but the amounts in those separate accounts are not accurate, with one party benefiting at the expense of the other.  I suppose the only correction that would be equitable would be a new calculation and a direct transfer between the two accounts to reflect the new calculation. In early 2023 there were small equity gains in the market and bond losses, so the net change would likely be very small. Therefore, with the custodian and the IRS both likely unaware of these technical issues, they should be ignored at this point.
  • With the 2022 RMD having been completed by the decedent, and with the distribution having been made to the charity and the surviving spouse having assumed ownership of their inherited IRA, the 2023 RMD for the surviving spouse should be calculated using the Uniform Table.
  • Conclusion: Pecuniary bequests should be avoided. 

Submitted by Shirley Klupchak on Thu, 2023-11-30 19:27

DOD was 12.29.2022 and the RMD for that year had already been distributed.  The custodian is saying that the 2023 distribution covers the 2023 RMD.  Is that wrong? 

Submitted by Alan - IRA critic on Thu, 2023-11-30 19:43

See above. I edited my prior postabove  to reflect the current situation.

Submitted by David Mertz on Tue, 2023-11-28 22:03

IRAs with a beneficiary that is to receive a pecuniary amount are problematic.  For the separate-accounts rule to apply, the gains or losses in the IRA between the date of death and the date of the transfer to the charity would have to be allocated proportionately among the beneficiaries.  If investments within the IRA changed value between the date of death and the date the pecuniary interest was transferred to the charity, and the $60,000 was not adjusted accordingly, the separate-accounts rule would not apply.  If the separate-accounts rule does not apply, the surviving spouse cannot treat the remainder as the surviving spouse’s own, but could take a distribution and roll it over to their own IRA after satisfying the beneficiary RMD for the year.

Submitted by Shirley Klupchak on Tue, 2023-11-28 22:16

What determines whether or not the separate accounts rule applies?

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