Spousal BDA question
Hello,
I have a client house spouse passed in 2024 and they are trying to determine if they want to open a IRA BDA or IRA and treat the assets as their own. The spouse passed in 2024 and RMD was satisficed (82 years old) and now her husband (98) wants to open an IRA and treat the assets as their own. The husband would not need to start taking RMDs until 2026, right?
If they were to open and fund the IRA BDA an RMD would be due in 2024 the factor factor for a 98 year old is 3.2 on the single life table compared to 7.3 on the uniform one.
Thank you.
Permalink Submitted by Alan - IRA critic on Fri, 2025-01-17 16:19
If the objective is to have the lowest RMD, because spouse passed after RBD the “ghost” LE of that spouse can be used with the single life table (2024 divisor 9.9, therefore 2025 divisor is 8.9). This will produce a lower RMD than the Uniform Table for a couple years, but the annual 1.0 reduction will result in the Uniform Table producing the lower RMD in about 3 years, at which time ownership could be assumed.
Conversely, if 98 year old client passes with a beneficiary IRA, his beneficiary will have to continue his limited RMD schedule. But if client passes after electing ownership, then his beneficiary will be a designated beneficiary who can use their own LE and the inherited IRA would probably last 10 years if the beneficiary is a child or another younger beneficiary.
He could start with the lower RMDs, but as soon as he has serious health problems, he or his POA should elect to assume ownership.