Decedent Inheriting Various Accounts
70 year old widow inheriting IRA, former employer plan, and current employer plan from 73 year old spouse. What are her RMD requirements from each can she take over each balance as her own and defer RMDs until she reaches RMD age?
Permalink Submitted by Alan - IRA critic on Tue, 2025-06-03 17:26
The deceased spouse passed prior to RBD, so there is no year of death RMD required of the widow. And since the widow is over 59.5 and under RMD age, her best option is a direct rollover of the employer plans to her own IRA , and for the IRA an inherited IRA should be established and immediately the widow should elect to assume ownership of it. There would be no RMDs until she reaches 73.
Sometimes the employer plans will want to distribute an RMD because the deceased spouse was 73, but that is incorrect because his death was prior to RBD, and that eliminated any 2025 RMD he would have been responsible for had he lived.
Widow should at least determine if either of the two employer plans holds highly appreciated employer shares with a cost basis low enough to warrant NUA treatment in which the shares would be distributed to a taxable brokerage account, with the rest of the balance to her IRA. Instead of an IRA, if she prefers she could leave the employer plans in place as inherited. Per Secure 2.0 she should automatically be treated as the participant for RMD purposes meaning that she could leave the plan in place and use the Uniform Table for RMDs. However, the downside to that is her beneficiary RMDs would have to begin in 2026, before she is 73.
Employer plans might also hold Roth contributions.