Does Spouse Need to Take RMD from Inherited IRA?
Inheriting an IRA can be a significant financial windfall, but it also comes with a set of rules and regulations that must be followed. One of the most common questions among IRA beneficiaries is whether they need to take required minimum distributions (RMDs) from the inherited IRA. The answer to this question depends on several factors, including the type of IRA and the relationship between the deceased account owner and the surviving spouse.
Understanding the Basics of RMDs
RMDs are mandatory withdrawals from certain retirement accounts, including traditional IRAs and 401(k)s, that must begin by April 1 of the year following the account owner’s death. The purpose of RMDs is to ensure that the IRS collects taxes on the funds in these accounts over time. However, the rules regarding RMDs can vary significantly when it comes to inherited IRAs.
Spousal Beneficiaries and RMDs
If the deceased IRA owner named their spouse as the primary beneficiary, the surviving spouse has the option to treat the inherited IRA as their own. In this case, the surviving spouse can continue to make contributions to the IRA, as long as the account was originally a traditional IRA. Additionally, the surviving spouse can choose to take RMDs based on their life expectancy, which may result in smaller withdrawals than if they were required to take RMDs based on the deceased’s life expectancy.
Joint Tenancy with Right of Survivorship (JTWROS)
If the surviving spouse is the sole beneficiary of the inherited IRA and holds the account in joint tenancy with right of survivorship (JTWROS), they are not required to take RMDs from the inherited IRA until the surviving spouse’s death. This can provide more flexibility in managing the inherited funds and potentially defer taxes on the withdrawals.
Non-Spousal Beneficiaries and RMDs
For non-spousal beneficiaries, the rules are different. They must begin taking RMDs from the inherited IRA by December 31 of the year following the deceased account owner’s death. The RMDs are calculated based on the beneficiary’s life expectancy, which can be found in the IRS Single Life Expectancy Table.
Consulting with a Professional
Given the complexities of RMDs and inherited IRAs, it is essential to consult with a financial advisor or tax professional. They can help determine the best course of action for your specific situation and ensure that you comply with all applicable laws and regulations.
In conclusion, whether a spouse needs to take RMDs from an inherited IRA depends on various factors, including the type of IRA, the relationship between the deceased account owner and the surviving spouse, and the specific circumstances of the inheritance. Understanding these rules and seeking professional advice can help ensure that you make informed decisions regarding your inherited IRA.
