Life and Death Planning for Retirement Benefits

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Life and Death Planning for Retirement Benefits

this. That RMD amount may not be rolled over into the spouse’s IRA; see ¶ 2.6.02 (B). She can then roll over to her own IRA the rest of the QRP or 403(b) account.

For all years following the rollover year , the spouse’s RBD and RMDs with respect to the rollover IRA will be determined in exactly the same manner as would be true for any other IRA participant. For Roth IRAs, there will be no RMDs because Roth IRAs are not subject to the lifetime RMD requirement; see ¶ 5.2.02 (A). For traditional IRAs, see ¶ 1.4 for the RBD and ¶ 1.3 to determine the RMDs.

Rollover to Decedent’s IRA

The surviving spouse also has the right to “roll over” inherited QRP or 403(b) benefits to an IRA in the name of the deceased spouse-participant; see ¶ 3.2.07 . If the participant died after his RBD, the spouse cannot roll QRP or 403(b) benefits into an IRA in the decedent’s name without first taking the RMD the decedent would have had to take in the year of his death had he not died; the spouse cannot have greater rollover rights than the decedent himself had. Reg. § 1.402(c)-2 , A-12(a), first sentence. If benefits are rolled over to such an “inherited” IRA, see “D” for how to compute the spouse’s RMDs following the rollover (or “B” if the spouse then elects to treat the “inherited” IRA as her own). B. If spouse elects to treat inherited IRA/Roth IRA as her own. Unlike other IRA beneficiaries, the surviving spouse has the option to elect to treat a traditional or Roth IRA that she (as sole beneficiary) inherits from the deceased spouse as her own traditional or Roth IRA. See ¶ 3.2.03 . Once she has made this election, the IRA is treated as the spouse’s own IRA. If the account is a Roth IRA, see ¶ 3.2.03 (B). If it is a traditional IRA, see ¶ 1.4 for the RBD and ¶ 1.3 for how to determine the RMDs. If the spousal election is made in the year of the participant’s death, the RMD for the year of the participant’s death is still based on the distribution rules applicable to the decedent. Reg. § 1.408-8 , A-5(a), last two sentences; ¶ 1.5.03 (A); ¶ 1.5.04 (A). If the surviving spouse makes the election in the same year the participant died, RMDs will be calculated based on her being the participant beginning the following year. If the spouse makes the election in any year after the year of the participant’s death, her election is retroactive to the beginning of the year the election occurs, so RMDs will be calculated based on her being the participant beginning with the year of the election. Reg. § 1.408-8 , A-5(a), fifth sentence. The “account balance” ( ¶ 1.2.05 ) used to compute the RMD for a traditional IRA for the year of the election in this case is (presumably; there is no IRS pronouncement on point) the prior year-end balance of the elected account, even though the account was not “hers” in such prior year.

Should spouse roll over or “elect” the inherited IRA?

Note that the spousal election produces a different RMD result for an inherited IRA than a spousal rollover produces for an inherited QRP or 403(b) plan, if the rollover or election occurs in