Under Secure how should a spouse claim a Traditional IRA?
Deceased client is age 66, husband and spouse, wife is 71. What is the best way for her to claim Traditional IRA under the Secure Act? The husband passed in 2024. The goal is to convert to a Roth.
Roger
Permalink Submitted by Alan - IRA critic on Thu, 2024-10-17 18:49
If she wants to delay RMDs as long as possible, she could maintain the IRA in inherited form. Her RMDs would not begin until the year husband would have reached 73 (7 years). She could still convert without having RMDs to add to taxable income until he would have reached 73.
On the other hand, if she elects to assume ownership of the IRA, her RMDs will start in 2 years. Either way she can convert to Roth, but after her RMD year is reached she will have to complete the RMD first. She can convert from an inherited spousal IRA.
She should elect to assume ownership once her beneficiary RMDs start, because as the owner her RMDs will be lower.
But the IRA custodian may tell her that she is automatically treated as the participant for RMD purposes even though it’s still an inherited IRA. If so, she can still delay RMDs until deceased spouse would have reached 73, but then the Uniform Table could be used (same as if she assumed ownership). But she should still assume ownership no later than the year he would have reached 73.
This all assumes that she is the sole beneficiary of his IRA.