PRE Secure Act- Dec 2019 IRA Rule for IRA’s left to a Spouse
Best Route For deceased Spouse’s IRA
Decision needs to be made concerning deceased spouse’s IRA for 73 yr old spouse:
Deceased spouse-passed EOY 2019. RMD year for deceased is 2025.
Remaining spouse can either : use a stretch IRA strategy ( spouse started own RMD in 2024-deceased spouse’s RMD requirement must start in 2025)
or
Assume the IRA as their own.
In this scenario is it better to use the Stretch IRA method and just take out the added RMD amount every year going forward
or combine them going forward.
Thanks in advance for your insights.
Permalink Submitted by Alan - IRA critic on Mon, 2025-01-06 13:56
The surviving spouse should elect to assume ownership of the inherited IRA. If this is done anytime in 2025, the SS will be treated as owning the IRA for the entire year. The 2025 RMD will be from the Uniform Table and will be much lower than an inherited IRA RMD from the single life table. The formerly inherited IRA can also be combined by direct transfer with the SS’s other owned IRA.
By waiting until 2025 the SS avoided taking any RMD up through 2024 from the inherited IRA as the deceased spouse would evidently not have reached age 73 until 2025, so 2024 was the final year that RMDs could be avoided.
Owning the IRA will also make the current beneficiary of the SS a designated beneficiary rather than a successor beneficiary and will therefore accord this beneficiary preferable RMD options when they inherit the IRA.
Permalink Submitted by Pidgesmom on Mon, 2025-01-06 15:38
Thank you Alan for your informative response.
Just to be clear when you referenced “current beneficiary of the SS(surviving spouse)” the designated beneficiary could be an adult child versus that person being a successor beneficiary, right?
Also the IRA has never been designated as an “inherited IRA” , thus the decision to move forward to assume the IRA as the SS’s own is the better option versus a stretch IRA. Thanks again for your insight!
Permalink Submitted by Alan - IRA critic on Mon, 2025-01-06 15:51
Yes, the beneficiary of the SS would be a designated beneficiary if the spouse assumed ownership, but a successor beneficiary if the IRA continued as inherited.
It sounds like the SS has taken no action whatever on this IRA. If the death certificate and beneficiary contact info has not been submitted, the SS could not have named any beneficiary for their interest. Therefore, this info will need to be submitted prior to electing to assume ownership, because the SS must first establish an inherited IRA before they can assume ownership, take any distribution, name their own beneficiary etc. This can be done at the same time ownership is elected.
If there was an IRA basis from non deductible contributions as reported on Form 8606 by the decedent, the SS inherits the remaining basis, which would reduce the taxable amount of all future distributions, although Form 8606 would have to be filed every year to calculate the non taxable portion of all distributions.
Permalink Submitted by Pidgesmom on Sat, 2025-01-11 15:42
Follow-up Action Question- regarding Surviving Spouse Treatment of Deceased Spouse –
Hello there.
Thank you as always for your responsive and informative responses.
Follow-up question: Once ownership is taken on by the remaining spouse, will a RMD for the deceased spouse need to be taken for them in 2025? The deceased spouse would have been 73 this year