Jump to content

Spouse Beneficiary


Dobber
 Share

Recommended Posts

  • Traditional IRA owner, 82, died in December 2021 - He took his 2021 RMD prior to his passing
  • Surviving spouse, 81, 100% primary beneficiary
  • Surviving spouse transferred his IRA assets to her traditional-IRA. However the transfer of assets occurred in 2022 - therefore his IRA had a 12/31/21 value

Question(s)

  • Is a 2022 RMD due on the (now deceased husband's) IRA based off the 12/31/2021 account value?
  • Does the wife include the balance in determining her 2022 RMD? 

What am I missing?

All guidance is welcomed

Link to comment
Share on other sites

An RMD for the husband's IRA value as of 12/31/2021 is required for 2022. IRAs are not my area of expertise but since the IRA was still in the husband's name as of 12/31/2021 the RMD rules for those assets as I understand it would follow the RMD rules for a deceased IRA owner who was in RMD pay status at time of death. 

If the surviving spouse has other IRA assets as of 12/31/2021 she would need to take a 2022 RMD from those assets based on the regular RMD rules for her.

Since she elected to treat the IRA assets as her own I think it gets easier for 2023 as you can aggregate all her IRA balances as of 12/31/2022 to get the total 2023 RMD number.

 

Link to comment
Share on other sites

On 1/18/2022 at 1:50 PM, Dobber said:

Question(s)

  • Is a 2022 RMD due on the (now deceased husband's) IRA based off the 12/31/2021 account value?
  • Does the wife include the balance in determining her 2022 RMD? 

Dobber, the "transfer" was a direct rollover. See Treas. reg. 1.402c)-2, Q&A-1. It is treated as a 2022 distribution from the deceased's IRA, so oversatisfied the 2022 RMD requirement for deceased's IRA. See Treas. Reg. 1.401(a)(9)-7, Q&A-1 and 1.408-8, Q&A-7. The RMD for the deceased's IRA is determined under the post-death rules, and, as RMD, was not eligible for rollover. Because the remaining amount of the distribution, which was eligible for rollover, was not in the widow's IRA until after 12/31/2021, it will not affect her 2022 RMD from that IRA.

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

Link to comment
Share on other sites

Luke, since Dobber said it was a transfer (not a rollover), is it not possible that she elected to treat the deceased husband's IRA as her own first and then did a transfer from one of her IRA accounts to another?  (I think the benefits of doing that would be that she can use her age in the Uniform Lifetime Table to determine that RMD instead of the single life expectancy factor applicable to inherited IRAs in case of death after required beginning date). If she did that, I think she would just increase her old 12/31/21 IRA balance by the amount of the transfer based on 1.401(a)(9)-7, A-2 in determining her 2022 RMD. Of course, the IRA custodian would have to characterize the transaction this way. 

Link to comment
Share on other sites

On 1/18/2022 at 2:50 PM, Dobber said:
  • Traditional IRA owner, 82, died in December 2021 - He took his 2021 RMD prior to his passing
  • Surviving spouse, 81, 100% primary beneficiary
  • Surviving spouse transferred his IRA assets to her traditional-IRA. However the transfer of assets occurred in 2022 - therefore his IRA had a 12/31/21 value

Question(s)

  • Is a 2022 RMD due on the (now deceased husband's) IRA based off the 12/31/2021 account value?
  • Does the wife include the balance in determining her 2022 RMD? 

What am I missing?

All guidance is welcomed

An RMD is due for 2022 from the surviving spouse's IRA. The 12/31/2021 balance must be included when calculating the 2022 RMD. This 2022 RMD is calculated using the uniform lifetime table §1.408-8, Q&A5

Life and Death Planning for Retirement Benefits by Natalie B. Choate
https://www.ataxplan.com/life-and-death-planning-for-retirement-benefits/

www.DeniseAppleby.com

 

Link to comment
Share on other sites

8 hours ago, bito'money said:

Luke, since Dobber said it was a transfer (not a rollover), is it not possible that she elected to treat the deceased husband's IRA as her own first

bito'money, in your analysis above would the election to treat it as her own have had to happen in 2021 to get the result you say might apply?

6 hours ago, Appleby said:

An RMD is due for 2022 from the surviving spouse's IRA.

Appleby, sure.

6 hours ago, Appleby said:

The 12/31/2021 balance must be included when calculating the 2022 RMD.

Appleby, assuming the distribution occurred in 2022, how does that square with the statement in 1.401(a)(9)-7, Q&A-2 that the receiving plan/IRA's balance is not increased by the amount in question until the following year for RMD purposes?

BTW, if I ever change to a pseudonym for these posts, I think I will use "Stuff's too complicated" if it's not already taken .

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

Link to comment
Share on other sites

Luke, I believe that the answer is no, it wouldn't matter.

1.408-8 A-5(a) says the following with regard to an election by a spouse to treat the IRA as his or her own: 

"If the surviving spouse makes the election, the required minimum distribution for the calendar year of the election and each subsequent calendar year is determined under section 401(a)(9)(A) with the spouse as IRA owner and not section 401(a)(9)(B) with the surviving spouse as the deceased IRA owner's beneficiary.  "

So, if she made the election to treat her deceased husband's IRA as her own IRA in either 2021 or 2022, and then transferred the balance in that IRA into another one of her own IRAs the year-end balance for what was then her husband's IRA as of 12/31/2021 would be included with the rest of her year-end 2021 balances in determining her 2022 RMDs for her own IRAs.

 

Link to comment
Share on other sites

35 minutes ago, bito'money said:

for the calendar year of the election

 

36 minutes ago, bito'money said:

if she made the election to treat her deceased husband's IRA as her own IRA in either 2021 or 2022

No. If she made the election in 2022, then I think the answer I originally suggested would be applicable, bito'money.

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...