Life and Death Planning for Retirement Benefits

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70 Life and Death Planning for Retirement Benefits
the participant’s death; B)) so that the spouse can be deemed the sole
beneficiary as of the Beneficiary Finalization Date.
 In the case of the spouse’s right to elect to treat the deceased spouse’s IRA as the
spouse’s own IRA , she can make this election at any time after the
participant’s death provided that she is the sole beneficiary as of the Beneficiary
Finalization Date . See Reg. A-5(a).
1.6.03 Road Map: How to determine RMDs of surviving spouse
This is one of the more confusing aspects of the minimum distribution rules. There are
several different ways to compute RMDs for benefits left to (or in trust for) a surviving spouse,
though there is only one correct method for each particular situation.
Usually, the spousal rollover (see “A”) or election (“B”) provides better results (more
deferral opportunities) for the surviving spouse and her beneficiaries than does holding the account
as beneficiary (C–E). See A)–(C) for why that is so. Se D) for when the spousal
rollover or election should NOT be used. See B) for whether to use a rollover or an
election.
A. If spouse rolls over benefits to her own plan. Unlike other beneficiaries, the surviving
spouse has the ability to roll over, tax-free, to her own IRA or to her own account in any
other eligible retirement plan, any QRP, IRA, or 403(b) benefits left to her by her deceased
spouse. Following such a rollover, the benefits are now in the spouse’s
own retirement plan, and are no longer in an “inherited plan.” Accordingly, she takes
RMDs as “participant” (¶ 1.3) rather than as “beneficiary” (¶ 1.5) beginning the year after
the rollover (Reg. A-7); for requirements applicable to the distributing plan in
the year in which the rollover occurs, see
For the year following the rollover and later years, the spouse’s RBD and RMDs will be
determined in exactly the same manner as would be true for any other participant in that particular
type of plan or IRA. For Roth IRAs, there will be no RMDs because Roth IRAs are not subject to
the lifetime RMD requirement; see A). For traditional plans and IRAs, see for the
RBD and ¶ 1.3 to determine the RMDs.
The surviving spouse also has the right to “roll over” inherited benefits to an IRA in the
name of the deceased spouse; see If benefits are held in or rolled over to such an
“inherited” plan or IRA, see “D” for how to compute the spouse’s RMDs.
B. If spouse elects to treat inherited IRA/Roth IRA as her own. Unlike other IRA
beneficiaries, the surviving spouse has the ability 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. Once she has made this election, the IRA is treated as the spouse’s
own IRA. If the account is a Roth IRA, see B). If it is a traditional IRA, see
for the RBD and ¶ 1.3 for how to determine the RMDs.
The exception to this rule is that the RMD for the year of the participant’s death is still
based on the distribution rules applicable to the decedent. Reg. A-5(a); A);
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.