RMD clarification help needed with inherited IRA.

[aja8888]

DW passed in early December 2022 and had a traditional IRA and has been taking RMDs for years. She took a RMD in February 2022, as required for the year ending 2021 account balance. I did the same for my IRA RMD for 2021.

Late December 2022, I filed an application to have her IRA transferred into mine as that was an option seeing I was the sole beneficiary. It took until January 8, 2023 to have that transfer made. So now both accounts have been merged and her IRA account is closed permanently.

At this point, I assume her and I will be required to take RMDs for the year ending 2022. Both of our accounts were active during the full year 2022 as hers was not closed out until January 8, 2023. On the application to transfer her IRA to mine, I did specify the date of death (December 8, 2022) and provided Schwab with the death certificate (both IRA’s are at Schwab).

The other day, I logged into my Schwab account and went to the “take my RMD” tab to see what amount is posted for me to withdraw. I expected that the combined RMD amount (the blended accounts) amount would be there and the RMD calculation would reflect the increased amount.

To my surprise, the RMD amount has been calculated on MY EOY account balance only. Since her account is closed, there is no way to see if Schwab had used her RMD ending balance in 2022 to calculate an amount of RMD to be pulled in 2023 and left that number within the closed account.

Questions are:

Is her IRA account subject to an RMD pull for the year ending 2022 (remember she passed in December 2022)?

If so, how does that get done since my account only shows that my RMD is calculated on my 2022 ending IRA account value and not the blended value?

Also, before the IRA transfer got completed, I asked Schwab what the 2022 ending balance was in her account and they gave me the figure over the phone (I had no account access).

Clearly, I am not sure where to go from here, but have lots of time.

Thanks for any guidance you can give.

 

[djsander]

Sorry for your loss. I thought I had the answer but I came up with conflicting information. Some really smart people on here probably know the answer. I usually get this sort of thing incorrect. I would think a call to Schwab could clarify anything else with this.

 

[Car-Guy]

Sorry for your loss. I thought I had the answer but I came up with conflicting information. Some really smart people on here probably know the answer. I usually get this sort of thing incorrect. I would think a call to Schwab could clarify anything else with this.

And I'd ask for it in writing, especially if there is any remaining doubt. Worse case, hire a tax lawyer.

 

[aja8888]

Sorry for your loss. I thought I had the answer but I came up with conflicting information. Some really smart people on here probably know the answer. I usually get this sort of thing incorrect. I would think a call to Schwab could clarify anything else with this.

And I'd ask for it in writing, especially if there is any remaining doubt. Worse case, hire a tax lawyer.

I talked with Schwab when the transfer was underway and they said talk with a tax professional.

 

[Accidental Retiree]

Wow, this situation can’t be that unusual.

It would seem to me since she satisfied her RMD for 2022, that’d be it. And nothing would be due for 2023.

I’m interested in knowing the right answer.

 

[audreyh1]

I can’t imagine her owing an RMD for 2023.

But it seems that you would be subject to RMD on the combined accounts based on the combined Dec 31 value. It doesn’t matter that the account didn’t get combined with yours until 2023. Maybe everything has not yet flowed over at Schwab.

 

[aja8888]

I can’t imagine her owing an RMD for 2023.

But it seems that you would be subject to RMD on the combined accounts based on the combined Dec 31 value. It doesn’t matter that the account didn’t get combined with yours until 2023. Maybe everything has not yet flowed over at Schwab.

That's what I am hoping and, in any event, I have the correct EOY amount for her account. And I always pull a bit more anyway.

 

[TheWizard]

I can’t imagine her owing an RMD for 2023.

But it seems that you would be subject to RMD on the combined accounts based on the combined Dec 31 value. It doesn’t matter that the account didn’t get combined with yours until 2023. Maybe everything has not yet flowed over at Schwab.

I agree with this.
Just compute your new RMD yourself.
No need for Schwab to do it...

 

[SecondCor521]

The taxpayer is responsible for determining the correct RMD. Schwab and other custodians can do calculations, but they might (and sometimes do) get things wrong. And Schwab and other custodians won't give tax advice, which includes properly calculating RMDs.

Your language is a bit confusing to me, but I think I understand what you mean. The RMD for an account owner for any given year - say 2022 - is based on the aggregate account value at the end of the previous year (2021) divided by the divisor in the uniform life table in IRS Pub 590-B for the age you turn on your birthday in the given year (2022). (*)

It sounds to me like you and she both satisfied your 2022 RMDs based on your respective ages on your 2022 birthdays based on the 2021 year end balances.

Since she died in 2022, she has no responsibility to take a 2023 RMD. You have a responsibility to do so based on the year end values of all of your IRAs and your age on your birthday this year.

Since you transferred her IRA into your IRA, IRS Pub 590-B says that you have elected to treat her IRA as your own (IRS Pub 590-B page 6 at https://www.irs.gov/pub/irs-pdf/p590b.pdf).

Therefore, you should take the 2022 year end balance of your IRA and her-IRA-that-is-now-yours, add those together, apply the proper divisor, and take that amount (at a minimum) from your IRA.

As the surviving spouse (and probably executor of her estate), you should be able to get ahold of the year end value on a statement for her IRA. I'd be inclined to do that rather than rely solely on an over-the-phone value.

(*) Generally. Inherited IRAs and IRAs where the spouse is the sole beneficiary and more than 10 years younger are exceptions.

 

[audreyh1]

The account became yours in 2022.

 

[braumeister]

Therefore, you should take the 2022 year end balance of your IRA and her-IRA-that-is-now-yours, add those together, apply the proper divisor, and take that amount (at a minimum) from your IRA.

That's the way I see it. Of course the divisor is yours, regardless of what hers was.

 

[aja8888]

The taxpayer is responsible for determining the correct RMD. Schwab and other custodians can do calculations, but they might (and sometimes do) get things wrong. And Schwab and other custodians won't give tax advice, which includes properly calculating RMDs.

Your language is a bit confusing to me, but I think I understand what you mean. The RMD for an account owner for any given year - say 2022 - is based on the aggregate account value at the end of the previous year (2021) divided by the divisor in the uniform life table in IRS Pub 590-B for the age you turn on your birthday in the given year (2022). (*)

It sounds to me like you and she both satisfied your 2022 RMDs based on your respective ages on your 2022 birthdays based on the 2021 year end balances.

Since she died in 2022, she has no responsibility to take a 2023 RMD. You have a responsibility to do so based on the year end values of all of your IRAs and your age on your birthday this year.

Since you transferred her IRA into your IRA, IRS Pub 590-B says that you have elected to treat her IRA as your own (IRS Pub 590-B page 6 at https://www.irs.gov/pub/irs-pdf/p590b.pdf).

Therefore, you should take the 2022 year end balance of your IRA and her-IRA-that-is-now-yours, add those together, apply the proper divisor, and take that amount (at a minimum) from your IRA.

As the surviving spouse (and probably executor of her estate), you should be able to get ahold of the year end value on a statement for her IRA. I'd be inclined to do that rather than rely solely on an over-the-phone value.

(*) Generally. Inherited IRAs and IRAs where the spouse is the sole beneficiary and more than 10 years younger are exceptions.

Agree and that's my line of thinking. Maybe I should try to get a hard copy of her closing IRA account statement from Schwab instead of using the verbal one they gave me? (although the amount is what I had anticipated)

What has confused me is that Schwab has not updated the account balance they say to use as the RMD basis in my combine online account. I always make the RMD calculation myself rather than use their number.

Yes, we satisfied the 2022 RMD.

 

[SecondCor521]

Agree and that's my line of thinking. Maybe I should try to get a hard copy of her closing IRA account statement from Schwab instead of using the verbal one they gave me? (although the amount is what I had anticipated)

Yes, I would. There should be either a monthly or year end statement from Schwab for her IRA because it didn't transfer by 12/31/2022. And you should be able to get your hands on it.

What has confused me is that Schwab has not updated the account balance they say to use as the RMD basis in my combine online account. I always make the RMD calculation myself rather than use their number.

They won't, because your IRA account as of 12/31/2022 didn't include her IRA assets, and they likely won't address your scenario (even if you think they might ought to).

You just have to do the math yourself in this case and ignore the lower Schwab amount.

I suppose you could at least check to see if the divisor Schwab is using is the same one you are in your own calculations. If they have your birthdate correct the divisors should match.

 

[CRLLS]

delete

 

[MissMolly]

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