Question:
Hello,
Our daughter (age 50) is the sole beneficiary of her husband’s (age 52) IRA due to his death in April 2024. Is there a time limit for when she must either take ownership or roll it over into her own IRA or other qualified plan?
Thank you,
Marylou Pagano
Answer:
Hi MaryLou,
Our condolences on the death of your son-in-law.
Your daughter as a spouse beneficiary has some options. She may consider keeping the IRA as an inherited IRA. If she does a spousal rollover into her own IRA and then needs to take a distribution, she will be subject to the 10% early distribution penalty because she is under age 59½. By delaying a spousal rollover and keeping the account as an inherited IRA, she would avoid this penalty because it does not apply to inherited accounts.
No distributions would be required from the inherited IRA until the year that the deceased IRA owner would have been age 73. She can still do a spousal rollover into her own IRA at any time. There is no time limit or deadline for this.
Question:
I have an 87-year-old mother who passed away after her required beginning date with three children as beneficiaries. They are each subject to the 10-year rule. Are the annual required minimum distributions (RMDs) based on the beneficiaries’ life expectancies or are they based on the original owner (87-year-old mother’s) life expectancy?
Thank you,
Janine
Answer:
Hi Janine,
You are correct that the beneficiaries in this case would be subject to the 10-year rule and would have to take annual RMDs during the 10-year period. Those annual RMDs would be based on the beneficiaries’ single life expectancies.
Spousal Beneficiaries and the 10-Year Rule: Today’s Slott Report Mailbag
Specializing in private wealth management, we provide education, guidance, and strategies to help you achieve a tax-efficient retirement income.
Specializing in private wealth management, we provide education, guidance, and strategies to help you achieve a tax-efficient retirement income.
Investment advisory services offered through Donato Wealth Management, PLLC, dba Empower Wealth Management and Empower Wealth & Tax (“Empower Wealth Management” or “EWM”),
an SEC registered investment adviser that only conducts business in jurisdictions where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting.
The information presented is believed to be current. It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. You should consult with a professional adviser before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned, or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Personal investment advice can only be rendered after the engagement of EWM, execution of required documentation, and receipt of required disclosures. All investment and insurance strategies have the potential for profit or loss. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. Past performance is no guarantee of future results. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD #305031.
Insurance products and tax services are offered through Senior Tax and Insurance Advisors, PLLC, dba Empower Wealth Group (“Empower Wealth Group” or “EWG”). Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products. They do not in any way refer to investment advisory products offered through EWM. Rates and guarantees provided by insurance products and annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank or the FDIC. EWG is not affiliated with or endorsed by the U.S. Government, Social Security Administration, nor the federal Medicare program. You may be contacted by a licensed insurance agent. Calling the number above will direct you to a licensed insurance agent. EWG may not offer every plan available in your area. Any information provided is limited to plans available in your area. Please contact Medicare.gov or 1-800-MEDICARE.
EWM and EWG are both affiliated companies of Empower Wealth, LLC (“Empower”). Investment adviser representatives of EWM may have a financial incentive to recommend tax and insurance products and/or services offered through EWG which presents a conflict of interest. This conflict is addressed by EWM’s adoption of its Code of Ethics, which requires that all EWM’s Associated Persons place the interest of clients ahead of their own. Clients of EWM are also free to choose their own tax and/or insurance professionals and are under no obligation to utilize the services offered through any related entities or persons associated with Empower.
Strategic Partners listed on this page are not employees of EWM and are not affiliated through common ownership.
We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.
© Empower Wealth Management All Rights Reserved.
