IRA beneficiary | Ed Slott and Company, LLC

IRA beneficiary

If a husband's will bequests all assets to his wife, are there any tax issues if his IRA has his estate as his beneficiary as opposed to his wife?

The IRA will become a probate asset under the will. There are many IRS letter rulings that a surviving spouse who is the sole beneficiary under the will can roll over the IRA to her own IRA.  The only challenge is finding an IRA custodian who will accept the rollover without a new letter ruling. If the spousal rollover cannot be done, the estate will remain as beneficiary until the executor assigns the inherited IRA to the surviving spouse. If husband passed prior to his RBD, the 5 year rule will apply. If after the RBD, then the remaining life expectancy of the decedent will determine the annual RMDs for the beneficiary IRA. Obviously, the surviving spouse should pursue a spousal rollover.

If the husband passed before a RMD and the surviving spouse does a spousal rollover,  can she then base her RMD's on her life and not begin them until 70 1/2?

Yes, she can. The spousal rollover replaces a beneficiary IRA with an owned IRA and therefore erases the beneficiary RMD rules including the 5 year rule if husband passed prior to RBD or beneficiary Table I life expectancy RMDs if husband passed after the RBD.


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