Deceased spouse IRA-FIA (annuity) 5 year death settlment election

Submitted by William Livingston on Thu, 2019-10-31 15:54

Hello fellow Professionals…(can death settlement IRA, count toward surviving spouse RMD)

My clients economic gain opportunity is to elect a (5) year (increased reserve death benefit) vs. Spouse Continuation IRA, upon the death in Sept 2019, of her Husband’s age at death 79, Surviving Spouse age 72.

Are there any opines as to the ability or acceptance to (utilize-treat) IRA death settlement remittance elected as installments (in this case 5 years), as satisfaction for Surviving Spouse, Inherited and Individually Owned IRA’s (in this case the Surviving Spouse is age 72, post, age 701/2)?

Surviving Spouse (age 72) has her own IRA’s, and inherited $200K, or deceased Spouse Brokerage IRA, (in addition to the annuity death benefit option IRA).

There seem to be different opines as to the ability of a deceased spouse Fixed Index Annuity (enhanced death benefits reserve) elected as Death Settlement Option, paid to surviving Spouse as primary beneficiary?



Submitted by Alan - IRA critic on Thu, 2019-10-31 16:21

  • If the death benefit is large enough, she would be better off to postpone the spousal rollover until all the death benefits were paid out. The RMD for that inherited IRA using the single life table would be considerably higher than the Uniform Table, and if she were to pass her own beneficiary would just be a successor beneficiary. A determination of actual value using the actual balances should be done. One question is whether this 5 year payout must include the entire balance of the inherited IRA. If so, because the 5 year IRS rule does not apply for deaths after the RBD, she could roll over annual distributions to the extent they are more than the Table I recalculated life expectancy RMD for the inherited IRA annuity.
  • This RMD cannot be aggregated with RMDs for IRAs she owns, but can be aggregated with the RMDs of his brokerage IRA (inherited from same decedent). However, since she can roll over the distribution in excess of the LE RMD for the annuity, that is preferable to keeping the brokerage IRA as inherited and generating a larger RMD for that one. Therefore, any aggregation she does should be limited to her owned IRAs.


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