Surviving spouse as beneficiary and not owner

I have a client that became beneficiary of his deseased wife’s IRA but has not taken ownership. He can wait to take RMD until the end of the year in which she would have turned 701/2 in 2011. I am waiting to see if contingent beneficiaies were named in her IRA. Assuming there are cont. bene’s named, what happens if he dies before he starts his RMD-pub 590 says that he will be treated as if he were the owner 1)does that mean that the contingents can create separate accounts and use their own LE’s and stretch?

2)If he dies after he begins taking his RMD in 2011 is it tue that his LE is frozen and the cntingents would have to use his frozen LE?

3)assuming no contingents and a desire to have children stretch, do we need to have him assume ownership, start taking RMD and name the children as beneficiaries.

Thank you,

Greg



Greg,
1) Yes, providing that by “contingents” you are referring to your client’s successor beneficiaries and not contingent beneficiaries named by his wife. Those were voided by her death. But if he names his own successor beneficiaries (could be the same ones), then the “Death of Surviving Spouse” clause per Pub 590, p 37 comes into play and those successor beneficiaries get the stretch.

2) Yes, that is correct if he is taking RMDs as a beneficiary. He should assume ownership of the IRA to avoid this, which he can do anytime.

3) Yes.



Thanks Alan, I appreciate your help. I’ll advise him to take ownership to preserve the stretch.

best regards,

Greg

[quote=”[email protected]“]Greg,
1) Yes, providing that by “contingents” you are referring to your client’s successor beneficiaries and not contingent beneficiaries named by his wife. Those were voided by her death. But if he names his own successor beneficiaries (could be the same ones), then the “Death of Surviving Spouse” clause per Pub 590, p 37 comes into play and those successor beneficiaries get the stretch.

2) Yes, that is correct if he is taking RMDs as a beneficiary. He should assume ownership of the IRA to avoid this, which he can do anytime.

3) Yes.[/quote]



Good morning. After the surviving spouse beneficiary claims ownership-when is he required to take first RMD?

Thanks,

Greg

[quote=”[email protected]“]Thanks Alan, I appreciate your help. I’ll advise him to take ownership to preserve the stretch.

best regards,

Greg

[quote=”[email protected]“]Greg,
1) Yes, providing that by “contingents” you are referring to your client’s successor beneficiaries and not contingent beneficiaries named by his wife. Those were voided by her death. But if he names his own successor beneficiaries (could be the same ones), then the “Death of Surviving Spouse” clause per Pub 590, p 37 comes into play and those successor beneficiaries get the stretch.

2) Yes, that is correct if he is taking RMDs as a beneficiary. He should assume ownership of the IRA to avoid this, which he can do anytime.

3) Yes.[/quote][/quote]



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