Spouse began Bene RMD and not yet 59 1/2….
I have a client who has a spousal bene IRA and has begun bene RMD withdrawals due to the fact her deceased husband would have turned 70 1/2 in 2016. Our client is not yet 59 1/2 (turns 59 1/2 in 2020) and is now wondering, once she turns 59 1/2, can she transfer this IRA into her own IRA? This would eliminate her beneficiaries from having to follow her RMD schedule.
Permalink Submitted by Alan - IRA critic on Thu, 2018-07-19 23:43
Her beneficiaries would not have to use her schedule unless she passes with a beneficiary IRA after she reaches 70.5. However, she can elect to assume ownership of the entire IRA now if she is sure that she will not need distributions before 59.5. Another option is to keep only the amount she may need to withdraw in the beneficiary account until 59.5, and roll over the rest that she will not need before 59.5. That will reduce her beneficiary RMDs since the balance of the inherited IRA will be reduced for 2019 RMDs.
Permalink Submitted by Wendy Mommaerts on Fri, 2018-07-20 13:03
Since she’s already taking Bene RMD’s, would her beneficiaries have to continue her RMD schedule if she passes at the age of let’s say 65?
Permalink Submitted by Alan - IRA critic on Fri, 2018-07-20 15:49
They will if she passes with a beneficiary IRA, since her RMDs have begun. However, if she elects to assume ownership or rolls it over to her own IRA, her named beneficiaries on the owned IRA will get their own life expectancy stretch when they inherit.