RMDs on IRA inherited from spouse when I'm too young, she was taking RMDs

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mrc
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RMDs on IRA inherited from spouse when I'm too young, she was taking RMDs

Post by mrc »

I am going to inherit my wife's IRA. I'm 65 and not subject to RMDs until age 73. My spouse began taking her RMDs in 2022 (b. late 1950, and delayed one year by COVID if I recall). I am the sole beneficiary of her IRA.

I'm confused by the tangle of rules surrounding inherited spousal IRAs. So here's what I think I must do, and I would be delighted for others to confirm or set me straight:

1) Move her funds into an inherited IRA account under my name.

2) Then must I take an RMD from that account even though I'm not subject to RMD yet?

2b) If so, I would use her age to compute the amount?

3) It is not possible for me to postpone RMDs on the inherited amount — I just can't transfer her funds to my IRA and wait 8 more years.

Thanks.
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MathWizard
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Re: RMDs on IRA inherited from spouse when I'm too young, she was taking RMDs

Post by MathWizard »

As a spouse you can roll over into your own IRA and use your age for RMDs, among other options,
See:
https://www.irs.gov/retirement-plans/pl ... eneficiary
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retired@50
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Re: RMDs on IRA inherited from spouse when I'm too young, she was taking RMDs

Post by retired@50 »

mrc wrote: Sun Feb 11, 2024 1:34 pm I am going to inherit my wife's IRA. I'm 65 and not subject to RMDs until age 73. My spouse began taking her RMDs in 2022 (b. late 1950, and delayed one year by COVID if I recall). I am the sole beneficiary of her IRA.

I'm confused by the tangle of rules surrounding inherited spousal IRAs. So here's what I think I must do, and I would be delighted for others to confirm or set me straight:

1) Move her funds into an inherited IRA account under my name.

2) Then must I take an RMD from that account even though I'm not subject to RMD yet?

2b) If so, I would use her age to compute the amount?

3) It is not possible for me to postpone RMDs on the inherited amount — I just can't transfer her funds to my IRA and wait 8 more years.

Thanks.
I don't think you have to move the funds into an inherited IRA (1) above. Spouses have better options than other inheritors.

I think you can elect to treat the account as your own, and just add the money to your own IRA, which will be subject to your own withdrawal rules.

More details in the wiki: https://www.bogleheads.org/wiki/Inheriting_an_IRA

Regards,
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Lee_WSP
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Re: RMDs on IRA inherited from spouse when I'm too young, she was taking RMDs

Post by Lee_WSP »

Roll it into your own and take out the last year's RMD he didn't. Also, condolences.
Topic Author
mrc
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Re: RMDs on IRA inherited from spouse when I'm too young, she was taking RMDs

Post by mrc »

That IRS page was what I was looking for. Thanks everyone.
Death of the account holder occurred in 2020 or later

Spousal beneficiary options

If the account holder's death occurred after the required beginning date, the spouse beneficiary may:

Keep as an inherited account
Take distributions based on their own life expectancy, or
Rollover the account into their own IRA
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Alan S.
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Re: RMDs on IRA inherited from spouse when I'm too young, she was taking RMDs

Post by Alan S. »

Sorry to hear of your situation.
It's not clear if your wife is still living or not.

If she passes in 2024, you should submit a copy of the death Cert and have the custodian establish an inherited IRA. Immediately thereafter notify the custodian that you have elected to assume ownership of that inherited IRA. The custodian will then transfer the funds to an owned IRA account, which you can then directly transfer into your own IRA if you already have one.

For the year that she passes you must complete her RMD for that year if she did not do so, and that will be the only RMD you must take. If you were born in 1958 or 1959 your own RMDs will not start until you are 73, so you will have several years before another RMD is due. There is no benefit for you to continue the inherited IRA.

Be sure to name your own beneficiary ASAP.

Now, if either you or your wife have IRA basis from non deductible contributions, please advise the % of basis, as that may affect which account you complete the year of death RMD from, if applicable.
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mrc
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Re: RMDs on IRA inherited from spouse when I'm too young, she was taking RMDs

Post by mrc »

Alan S. wrote: Sun Feb 11, 2024 2:32 pm Sorry to hear of your situation.
It's not clear if your wife is still living or not.

If she passes in 2024, you should submit a copy of the death Cert and have the custodian establish an inherited IRA. Immediately thereafter notify the custodian that you have elected to assume ownership of that inherited IRA. The custodian will then transfer the funds to an owned IRA account, which you can then directly transfer into your own IRA if you already have one.

For the year that she passes you must complete her RMD for that year if she did not do so, and that will be the only RMD you must take. If you were born in 1958 or 1959 your own RMDs will not start until you are 73, so you will have several years before another RMD is due. There is no benefit for you to continue the inherited IRA.

Be sure to name your own beneficiary ASAP.

Now, if either you or your wife have IRA basis from non deductible contributions, please advise the % of basis, as that may affect which account you complete the year of death RMD from, if applicable.
Thank you Alan. She's in her last days/hours in home hospice.

Thank you for the directions. I already took her RMD (and QCD) knowing her passing this year was likely. I figured there could be no QCD after her death.

I will name a new beneficiary — I imaging that's easy to put off and not do. No non-deductible contributions are involved.
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Alan S.
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Re: RMDs on IRA inherited from spouse when I'm too young, she was taking RMDs

Post by Alan S. »

OK, then you should assume ownership of the inherited IRA. While no reason not to complete that this year, you will have to do this no later than 12/31/2025 to eliminate having to take a beneficiary RMD in 2025.

Finally, since 2024 will be the last year you can file jointly at those lower tax rates, you might check into converting a portion of your IRA to a Roth IRA before year end, since conversion taxes will be more at your single rate in 2025 or beyond.
Topic Author
mrc
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Re: RMDs on IRA inherited from spouse when I'm too young, she was taking RMDs

Post by mrc »

Thanks Alan, I will look into one last Roth conversion while I'm filing MFJ.
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Re: RMDs on IRA inherited from spouse when I'm too young, she was taking RMDs

Post by mkc »

[Topic is now in Personal Finance (Not Investing) - RMDs - mod mkc]
Topic Author
mrc
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Re: RMDs on IRA inherited from spouse when I'm too young, she was taking RMDs

Post by mrc »

My wife passed away yesterday. These answers are so helpful.
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HomeStretch
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Re: RMDs on IRA inherited from spouse when I'm too young, she was taking RMDs

Post by HomeStretch »

Condolences. Take time to celebrate her life and grieve your loss. The financial stuff can wait a bit.
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