Spousal Inheritor older; Inh IRA vs Spousal Transfer?
One of my clients recently passed. She was in her 50s. Her spouse is in her late 70s, so of RMD age. If we do the normal thing (spousal transfer into her own account) then she’ll be needing to take RMDs on these funds starting next year.
Since the spouse is an eligible designated beneficiary, she should be able to take the inheritance as an inherited IRA, and not be subject to RMDs until her spouse would have achieved her required beginning date. This is 20 years hence, at which point the inheriting spouse would be 98 (if she lives that long.)
My question is what happens if we go this route and the inheriting spouse passes before starting RMDs? Will the inheritor(s) simply start the 10 year rule at that point?
Permalink Submitted by Alan - IRA critic on Tue, 2024-04-02 04:23
Yes, if the surviving spouse passes before beneficiary RMDs are required, the SS is treated as the owner (passing post RBD) with respect to the next beneficiary. Therefore, the next beneficiary might qualify as an EDB, but probably more likely they would not and therefore the 10 year rule would apply.