Spousal Inherited IRA RMD Calculation
We are an RIA and don’t have CPAs on staff. How do most firms calculate the RMDs for spousal inherited IRAs? Do they refer to CPAs or are there online calculators which let you run comparisons?
Thank you!
We are an RIA and don’t have CPAs on staff. How do most firms calculate the RMDs for spousal inherited IRAs? Do they refer to CPAs or are there online calculators which let you run comparisons?
Thank you!
Permalink Submitted by Alan - IRA critic on Tue, 2024-10-15 15:15
Most of the major IRA custodians (Schwab, Fidelity, Vanguard) maintain inherited IRA RMD calculators on their websites.
Most importantly, the amount of data needed for these calculators has increased due to the Secure Act. This includes the DOB and DOD of death of the plan owner, the type of plan inherited that may have been transferred to an inherited IRA, the DOB and DOD of the beneficiary, and if spouse is the sole beneficiary.
The surviving spouse now has 3 options instead of 2. Those are 1) being treated as the beneficiary, 2) being treated as if they were the participant for RMD purposes. and (3) the traditional spousal rollover to their own IRA.
Inherited IRA may start as 1) or 2), and 3) can be done anytime. The spouse cannot go from 2 to 1 or from 3 to either 1 or 2. As before, the best time to assume ownership depends on the beneficiary age as well as the deceased spouse’s age.
And the default rule still applies – that if a sole beneficiary spouse fails to take an RMD as beneficiary, they default to ownership status regardless of how the IRA is titled.