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    catonsville's Avatar
    catonsville Posts: 894, Reputation: 91
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    #1

    Sep 6, 2014, 07:39 PM
    Need some IRA Help
    My wife passed in April this year. and left me her IRA Annuity, we have not take out the MRD for 2014. Is it still required before I have it transferred to my IRA account?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #2

    Sep 6, 2014, 07:44 PM
    Off the top of my head, I would say, yes, you must take the MRD for your wife BEFORE transferring her IRA balance to your account.
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #3

    Sep 8, 2014, 11:38 AM
    catonsville - first, my condolences to you on your wife's passing.

    The answer is no, you do not have to take the RMD prior to moving the account. Assuming that the 2013 required minimum distribution (RMD) was done, the 2014 RMD is not due until December. Assuming this is a traditional IRA and you are the sole beneficiary, you have the option of either:

    (a) becoming the new owner, by retitling her account in your name, or rolling it into your existing traditional IRA. The RMD rules are based on your age, not hers, with the exception of the first year - for 2014 you must take an RMD by December 31 using your wife's RMD calculation for 2014. After that in future years RMDs are calculated based on your age.

    (b) treat yourself as a beneficiary, in which case you use your wife's age for the RMD calculations.

    In either case you can make the change of ownership prior to taking the RMD for 2014.
    catonsville's Avatar
    catonsville Posts: 894, Reputation: 91
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    #4

    Sep 8, 2014, 12:14 PM
    Quote Originally Posted by ebaines View Post
    catonsville - first, my condolences to you on your wife's passing.

    The answer is no, you do not have to take the RMD prior to moving the account. Assuming that the 2013 required minimum distribution (RMD) was done, the 2014 RMD is not due until December. Assuming this is a traditional IRA and you are the sole beneficiary, you have the option of either:

    (a) becoming the new owner, by retitling her account in your name, or rolling it into your existing traditional IRA. The RMD rules are based on your age, not hers, with the exception of the first year - for 2014 you must take an RMD by December 31 using your wife's RMD calculation for 2014. After that in future years RMDs are calculated based on your age.

    (b) treat yourself as a beneficiary, in which case you use your wife's age for the RMD calculations.

    In either case you can make the change of ownership prior to taking the RMD for 2014.
    Thanks very much. I also understand that I can by-pass the account on to my 3 children. Not needing the money, I am thinking about doing that as they are listed next inline.
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #5

    Sep 8, 2014, 12:31 PM
    Yes, you can do that, but be aware that your children will be required to either take distributions - and pay taxes - to empty the account in 5 years or less, or "stretch" distributions over their life expectancy. They cannot roll the inherited account into their own IRA.
    catonsville's Avatar
    catonsville Posts: 894, Reputation: 91
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    #6

    Sep 8, 2014, 08:19 PM
    Once again thanks. You added important data on doing the children thing.
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #7

    Sep 9, 2014, 11:49 AM
    Unfortunately IRAs are not terribly good vehicles for passing on one's estate to heirs. If I may suggest, and clearly not knowing your personal situation, the size of the IRA, or your children's needs - you may want to consider taking over your wife's IRA as your own, and as you take distributions make gifts to your children and/or grandchildren if you have any. You can give up to $14K to each person each year without any tax consequences. Another idea is if you have grandchildren is to set up and fund 529 accounts for them, so that they get a nice head start on college funding. Depending on the state you live in you may actually get a nice state tax deduction from it. Just a thought.
    catonsville's Avatar
    catonsville Posts: 894, Reputation: 91
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    #8

    Sep 9, 2014, 10:21 PM
    Quote Originally Posted by ebaines View Post
    Unfortunately IRAs are not terribly good vehicles for passing on one's estate to heirs. If I may suggest, and clearly not knowing your personal situation, the size of the IRA, or your children's needs - you may want to consider taking over your wife's IRA as your own, and as you take distributions make gifts to your children and/or grandchildren if you have any. You can give up to $14K to each person each year without any tax consequences. Another idea is if you have grandchildren is to set up and fund 529 accounts for them, so that they get a nice head start on college funding. Depending on the state you live in you may actually get a nice state tax deduction from it. Just a thought.
    Good Ideas. I am filling out the paperwork to put it in my account. Will look into setting up something for the great-grand kids.
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