Retirement Savings and Benefits
Questions and comments about IRAs, 401k accounts, social security, and other forms of retirement savings and benefits.
Using Table II for RMDs
Table II is identified as the life expectancy of those whose spouse is at least 10 years younger AND who are the sole beneficiary of their IRA. A couple of questions about this....
1. I assume this works only one way...younger. Does it work for the younger spouse when they begin their RMDs. Example, IRA owner is 70.5 and spouse is 85 and sole beneficiary. Must the younger spouse use the uniform table instead of Table II?
2. As the 'sole beneficiary' I assume this means a non-spouse cannot be named as a beneficiary on the IRA. Now, at death, if there is a non-spouse beneficiary along with the spouse, as long as the inherited IRA is split between the two by the end of the year following the year of death then the spouse will be considered the sole beneficiary of his/her separate IRA. But in life, in order to be able to use Table II would the IRA have to be split up into two separate IRAs with the spouse as beneficiary of one and the non-spouse as beneficiary of the other in order for the spouse to be able to use Table II?
3. If the younger spouse is at least 10 years younger and at age, say, 68 her spouse dies and the widow does not remarry, can she use table II for her own IRA when she attains age 70.5? I've heard this said, but can't find it stated anywhere, although the closest is p.11 of Pub 590-B under 'Table II', which says...
Note. Use this table in the year of the owner's death if the owner died after the required beginning date and this is the table that would have been used had he or she not died.
This suggests the surviving spouse cannot use Table II after the year of death for their own IRA RMDs.
Re: Using Table II for RMDs
1) Yes, younger spouse uses the Uniform table which assumes a sole spousal beneficiary 10 years younger, even when that spouse is 15 years older.
2) There are several questions with respect to defining how and when a spouse is considered to be the "sole beneficiary".
While still living, in order to use Table II, the spouse must be the sole beneficiary for the entire year, with exceptions for death and divorce. If the spousal beneficiary dies during the year and a new beneficiary is named, the RMD for that year is still based on Table II as if the spouse did not pass. This also applies for divorces, but NOT if the beneficiary is changed, as would usually be the case.
However, for post death RMDs the separate account rules appear to override the lack of guidance on when a "sole spousal beneficiary" is determined. For example, the Regs (1.401(a)(9)-8) indicate that if separate accounts are established by 12/31 of the year following the year of death, a surviving spouse does not need to start beneficiary RMDs until the year the deceased spouse would have been 70.5. Therefore, the surviving spouse DID NOT NEED to be the sole beneficiary on the decedent's account, they can use the separate account rules to become a sole spousal beneficiary. However, the surviving spouse cannot use Table II, they must use Table I. Table II only applies to an owner's RMDs. For the surviving spouse to use Table II, they would need to acquire ownership of the inherited IRA and remarry a spouse more than 10 years younger.
3) Covered above. Your conclusion is correct.
Re: Using Table II for RMDs
As always, Alan, thanks much!