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

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?



  • Normally, she would benefit from doing a spousal rollover, but the IRA annuity may not pay out the death benefit unless this account is maintained for 5 years as an inherited IRA. As an inherited IRA, RMDs cannot be aggregated with her owned IRA accounts, only with other inherited IRAs from her husband. Any inherited IRA RMD is calculated from the single life table, which generates a much higher RMD per dollar balance than a spousal rollover IRA account.
  • If the distribution needed to collect the death benefit is larger than the single life table RMD (and particularly if collecting the death benefit requires the total balance to be distributed in 5 years as well), she can roll over the amount distributed to the extent it is more than the RMD for that account using the single life table. The RMD for this inherited IRA annuity depends on what other fringe benefits the annuity contains, therefore the insurance company would generally have to provide the actual IRS RMD figure for this inherited IRA annuity in order for her to know how much of the amount distributed is eligible for rollover. Finally, she will have to either arrange for a direct transfer of this extra amount or navigate the one rollover limitation per 12 months. This is affected by the distribution date used by the insurance company. 
  • Inheriting an annuity usually results in restrictions and complexity for the beneficiary.


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