RMD for beneficiary IRA

Submitted by Richard Stumpf on Wed, 2017-12-06 17:09

client came to me 2 years after husband died. Husband was not 70.5 years old yet, but wife was already 72. should have already taken an RMD the prior year if it was a spousal IRA, so we set it up as a beneficiary IRA to retain husbands BD with the account and avoid the penalty for not taking the RMD. The intent was to then roll it to a spousal IRA the following year and start taking RMDs based upon wife’s age.

Client then died before we got it changed to the spousal IRA. The 2 kids who inherited the beneficiary IRA now need to take RMDs. Are the RMDs based upon mom’s age or dad’s age?



Submitted by David Mertz on Wed, 2017-12-06 17:45

  • In what year would the husband have reached age 70½?
  • In what year did the client die?
  • If the kids were designated beneficiaries of the client’s beneficiary IRA and the client died before the end of the year that the husband would have reached age 70½, RMDs will be based on the ages of the kids because, under these circumstances, a special rule results in the client being treated as owner of the IRA instead of as beneficiary.


Submitted by Richard Stumpf on Thu, 2017-12-07 16:44

husband would have reached 70.5 in 2016.client died Dec 2016.  So before the end of the year when the husband would have reached 70.5.So what is this special rule?  And we set the accounts up as BDA accounts under clients name, not under husbands name.  Did we do that right?  Thanks.



Submitted by Alan - IRA critic on Thu, 2017-12-07 17:33

 The client passed just before a beneficiary RMD for client needed to be withdrawn, therefore the kids get their own stretch as described by DMx above because client is treated as the owner with respect to her own beneficiaries. However, client did NOT have a year of death RMD for 2016 herself even though she was over RMD age because her treatment as the owner is ONLY with respect to her beneficiaries. There is an example in Pub 590 B of this exact fact pattern. Children do NOT have a year of death RMD of the owner to complete for 2016, but they need to establish separate inherited IRA accounts by 12/31/2017 if the youngest child is to be able to use their own single life expectancy for the 2017 beneficiary RMD.



Submitted by Richard Stumpf on Thu, 2017-12-14 21:58

One additional question on this.  In computing the RMD for the beneficiaries, am I computing using a joint life table or a single life table at the beneficiaries age?



Submitted by David Mertz on Thu, 2017-12-14 23:31

Beneficiary RMDs are always calculated using the Single Life Expectancy table.



Submitted by Alan - IRA critic on Thu, 2017-12-14 23:36

Use the single life table. The joint life table can never be used by a beneficiary for a beneficiary RMD. The age of the oldest beneficiary must be used by both beneficiaries unless the separate inherited IRA accounts are established by the end of 2017.



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