Inherited IRA and RMD

[taxmom34]

a friend died in january 2010 age 69, (she would have been 70 in february 2011) her husband 77 inherited her IRA account in Fidelity. he transfered the account to his name and wanted to continue receiving monthly distribution. i told him because of the RMD he had to take out more than what she was taking and fidelity would compute how much he should take out based on his life expectancy.. well... fidelity told him he did not have to take any distributions from this account until next year. Does that sound right?

[Lion]

Her lifetime

Can't he take it over HER lifetime OR HIS when it's a spouse?

[Davc]

If the friend didn't take her RMD prior to death, then her husband needs to take it as soon as possible. Read TTB 13-24.

[Roland Slugg]

If the friend didn't take her RMD prior to death, then her husband needs to take it as soon as possible.

There was no RMD requirement on the woman who died, because (according to the original post) she was only 69.

It wasn't clear in the OP if the husband merged his wife's IRA with his own, or if he opened an "Inherited IRA" and transferred her funds into that new account.

If the former, all it does is increase the balance in his account, thereby increasing the amount of his annual RMD. If the latter, he can wait until she would have been 70½ and then start taking RMDs from that new account. In this particular case it's the same, because she would have turned 70½ in 2010, but in another case there could be a delay of several (or many) years.

[taxmom34]

husband opened "inherited IRA" , didn't rollover into any of his accounts. So he can wait until wife would have been 70 1/2 , would the IRA then use her life expectancy and not his? i'm just concerned that he will not get hit with the 50% penalty based oin HIS age?

[Roland Slugg]

Would the IRA then use her life expectancy and not his?

No, it would be based on the beneficiary's age, BUT using Table I in Appendix C of Pub 590, not Table III. I don't believe RMDs are ever based on the age of a decedent, except for the RMD (if any) for the year of his death.

I would highly recommend reading the relevant portions of IRS Pub 590. That Pub was recently rewritten and is now much better and clearer than it used to be.