Question for the Money Doctors

Question submitted on Jun 24, 2022.

Question

I'm a little confused by the answer to the following question I received from your company. My concern is related to taking the RMDs on the inherited account based upon my wife., which was 71 on the date of her death. If I have to take an RMD on the inherited account, can I use her age to determine the amount of the RMD going forward, or am I locked into taking the RMD based upon my age. Also, I'm under the impression that as a spouse , I do not have to take an RMD at all from an inherited 401K, if I exhaust the account within 10 years of my wife's death. Thank you in advance for your response.
Question
I inherited my wife's 401k on the date of her death (i.e. 3/19/2022). My wife was born on 5/22/1950. As her spouse, am I able to use her age to determine RMDs that I need to take from this inherited account. I am 74 and have my own 401K that I am currently taking RMDs based upon my age. Do I need to maintain her account separate from my own in order to take the RMDs on her account based upon her age? Is there a certain type of account I need to set up to do handle the inherited 401K? Thank you for your response.
James Grant

Answer
So sorry for your loss.

You will need to take the RMD for the year of your wife's death first. Then you can roll your wife's 401k into your 401k and continue to take RMDs based on your age.

Answer

First thing that has to happen is for you to take your spouse's RMD that was due for this year but not taken yet.  After that, you have options:

1) you can become the owner of the IRA as previously mentioned and take it over your life expectancy (I thought from your question that this is how you wanted to proceed).  Your RMD would be based on your age, again, after this year because you'll have to take your spouse's RMD that she was required to take first

2) Remain a beneficiary of the IRA: The account is treated as an inherited IRA and future RMDs are based on the age of the deceased original owner. You may save a bit of money every year but you'll have two RMDs to calculate and distribute. 

 3) Rollover the IRA into your own IRA and take distributions based on your life expectancy

You can do the 10 year rule but your tax will probably be higher if you do so.

Hope this helps

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