Successor IRA

Husband
birth date 11/3/1936
date of death 9/30/2002

Wife inherited IRA & kept it as a bene IRA
birth date 12/8/1937
date of death 3/12/2015

Son inherited IRA along with 4 other siblings (all opened a bene IRA same year as mom died)
birth date 10/21/1959

our client, the son will continue following his mother’s RMD schedule and I am having troubles trying to figure out how the delivering firm calculated the 2015 RMD. The stated the ’14 YE value was 86153 with a 2015 RMD amt of $7557.28. if figuring this out correctly, shouldn’t the ’15 RMD be $9572.56 using life expectancy 9.0? I believe the wife would have begun her Bene IRA RMD in 2007 using the single life factor which would be 17.0 decreasing by 1 each year after which will then give us a factor of 9.0 for 2015….help



  • Do you know for sure whether the wife met all her beneficiary RMDs starting in 2007? The default rule makes her the owner of the inherited IRA if she was the sole beneficiary, if she fails to take the full beneficiary RMD in any year. If that happened, all 5 of her beneficiaries would get their own stretch instead of having to continue their mother’s RMD schedule. Remember that 2009 RMDs were waived.
  • To answer your question, a sole spousal beneficiary can re enter the SIngle life table each year instead of reducing the prior year divisor by 1.0. See “Spouse as sole designated beneficiary” on p 10 of Pub 590 B. The wife would therefore start with 17.0 for 2007, 16.3 for 08,etc. For 2015, the divisor is 11.4 which agrees with what the current custodian is coming up with. Of course, if mother was also reducing by 1.0 she would have been taking out more than necessary and would not have defaulted to ownership status.


I believe the wife met her RMD’s….I was just given additional information by our Custodian and can not find any documentation to verify it.I was told that in 2012 the IRS changed the ruling where the assets are treated as the last owner was the original owner.  This would then mean that our client (son) can use his life expectancy versus following his mothers.  Can you confirm this?



Nothing changed in 2012. But the rule you are referring to is stated in Pub 590 B, p 9, “Death of Surviving Spouse prior to date distributions begin”.  Under this rule, if the surviving spouse passes prior to the end of the year that the first RMD is required, she is treated as the owner. That allows her successor beneficiaries to be treated as designated beneficiaries and to use their own life expectancies. This situation would apply if the owner passed PRIOR TO his RBD and the surviving spouse was therefore allowed to wait until the end of the year the owner would have reached 70.5 to start beneficiary RMDs. In this particular case the husband DID pass prior to RBD, but would have reached 70.5 on 5/3/2007, and therefore the wife’s first beneficiary RMD was due by 12/31/2007. After that date the children must be treated as successor beneficiaries.  Since she passed well after that date and still met her beneficiary RMDs (so the default rule was never activated), the children must be treated as successor beneficiaries and continue the wife’s RMD schedule. However, THEY must reduce her divisor by 1.0 each year instead of re entering the table like a surviving spouse can. Therefore, for 2016 the divisor that applies will be 10.4, then 9.4 etc. The client’s remaining stretch will end in 2026. The obvious lesson here is that any surviving spouse should roll over an inherited IRA to their own no later than the year beneficiary RMDs start if they want to protect the life expectancy stretch for their own beneficiaries.



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