RMD for Deceased Owner/Spouse

[DP]

Business owner and spouse have been taking RMDs for several years. Owner's RMD for 2003 is $75,000. Owner took RMD of $10,000 in January 03. Owner died in March 03. Financial institution says spouse must take remainder of owner's 2003 RMD distribution by 12/31/03 ($65,000).

Financial institution says the balance of owner's IRA can be transferred to spouse, but spouse's RMD for 2003 must be recalculated including rollover value from owner. I thought 2003 RMD was based on 12/31/02 value. This looks like double dipping if spouse has to recalculate her 2003 RMD.

I need advice please.

[jaemmons]

The spouse, whom I assume is the designated beneficiary to the IRA, must receive the $65k by 12/31/03 in order to meet the mrd requirement for the deceased participant for the year of death.

The spouse's 2003 mrd is based upon their 12/31/02 IRA value. They do not assume ownership of the IRA until some time during 2003, which would first be taken into account for their 2004 mrd determination.

No recalculation is necessary.

See Treasury Reg 1.408-8

[DP]

Thank you. That's exactly what I needed.

[mbozek]

The 2003 MRD for an IRA in the spouse's name is based upon the value of the IRA as of 12/31/02. Since the IRA did not exist as of that date the 2003 MRD for the spouse is 0. When the IRA is transferred to the spouse in 2003 the spouse will have a year end value which will be the basis for the spouse's MRD in 2004. The balance of the MRD from the owners IRA which must be paid to the IRA beneficary by 12/31/03 is 65k.