When is the IRA "deemed" the spouse's IRA?

[Guest reg_h2b]

Facts:

IRA owner:

DOB 10/1929, thus 70.5 year 2000, therefor RBD is 4/1/2001.

Spouse:

DOB 7/1930, thus 70.5 year 2001

therfor RBD is 4/1/2002.

IRA owner dies on 9/1999 (before he starts MRDs). Sps is the prime bene.

Question:

If the spouse does not take out a MRD by 12/31/2000 (end-of-year following DOD and for all future years at what date is the IRA deemed to be the spouses under the "deemed" election for failure to take out a MRD under 408-8 Q&A A-4(B)?

I used to think it was 12/31/2004 (5 year rule) but Pub. 590 says that if no election is chosen and specified (by the plan?) and the spouse is the bene then the default election is the life expectancy of the designated bene. If so this deadline would be 12/31/2000 whether you apply 401(a)(9)(B)(iii) or the spousal exception under (B)(iv).

So the IRA would be considered the spouse's if the spouse does not take out an election by 12/31/2000?

Do you agree?

Is there anything wrong with the following strategy: elect the 5 year method then just before 12/31/2004 take out everything and do a spousal rollover into the spouse's IRA. MRD still due for 2004 but sps. defers all the other MRDs from 2000 through 2003.

Am I missing something? BTW, how does one elect to use the 5 year method if the default (spouse elects nothing) is life expectancy method?