Deceased husband IRA to my IRA questions

[VolvoGirl]

@dmertz   I was following that long  post on inheriting spouse's IRA made me think of a a couple questions.

My husband died in March 2023 at 76.  He hadn't taken his RMD yet.  Vanguard transferred his Traditional IRA into my IRA.  I turned 70 in Jan 2023. 

1.  Should/will I get a 1099R for the Transfer? 

2.  I made a QCD from my IRA after I turned 70 1/2 which was a lot more than his RMD.   Did his RMD need to be taken?  If so, how to I specify part of the QCD was for HIS RMD?  Or is it all reported under my name now?  

And I guess the same question for his 401K.  His 401k set up a Spousal 401k in my name.    Will I get a 1099R for the transfer to me?  What are the rules for RMD on that?  He hadn't taken his RMD yet.  They said no RMD for 2023 but I wasn't so sure about that so I had them send me the RMD.  If the RMD 1099R comes in my name do I enter it under his name?  Turbo Tax probably won't ask me about any RMD since I'm younger. 

And going forward with both the IRA and 401K will I need to take any RMD or just when I need to start my own?  Which is when......starting in 2025 (by April 2026)?

Thankyou, VG

[dmertz]

1.  Hopefully Vanguard did a proper trustee-to-trustee transfer so that the transaction is nonreportable and no Form 1099-R is issued, otherwise there is a complication of having rolled over an RMD.

2.  You were required to complete his 2023 RMD and you did so by making the QCD.  You'll receive a 2023 Form 1099-R in your name.  Nowhere on a tax return is there any indication that a particular distribution satisfies any part of an RMD.  When TurboTax asks if any portion of the distribution reported on this Form 1099-R is an RMD, you'll answer Yes and indicate the amount of your husband's RMD.  (This is only to allow TurboTax to disallow reporting any of the RMD as having been rolled over.)

Distributions made after your husband's death are your distributions, not his, and go under your name even though the distribution might be to satisfy his RMD.  The responsibility to complete his RMD became your responsibility upon his death.

It's not clear to me whether the spousal 401(k) is an inherited account or an account where you are the participant.  I suspect that it might be an inherited account which would make little sense since you are over age 59½.  Your husband's RMD for the 401(k) (if he had separated from service from the company sponsoring the 401(k) and had not already completed this RMD) was required to be distributed to you before or concurrently with rolling the remainder over to the spousal 401(k).  I would expect that you would receive a  code-4 Form 1099-R combining these distributions.

You'll be required to take RMDs from the IRA beginning with the year that you reach age 73.

If the spousal 401(k) is an inherited account (with distributions being reported with code 4), it would seem to make sense to roll the 401(k) over to your IRA, otherwise you'll have RMDs beginning in 2024 using the Single Life Expectancy table instead of lower RMDs using the Uniform Lifetime table beginning with the year you reach age 73.

[VolvoGirl]

Thank you!  Now for the 401K RMD do I use the tables in IRS 590b?  And for the worksheet do I use my age or his age in Appendix A-1 or use A-2 since I won't be 72 until 2025?  And I stay on that schedule instead of switching to my own when I turn 73?  

Or maybe the 401K will tell me how much to take.  At the time they did tell me that 2023 was not required but 2024 will be.  But they did send me the 2023 RMD, maybe they needed to or because I asked them to just to be sure.  

[dmertz]

Your husband's age on his birthday in 2023, the Uniform Lifetime table and the 12/31/2022 balance is used to determine his 2023 RMD whether it's for the IRA or the 401(k).

If they told you that no 2023 RMD for the 401(k) was required, either the 401(k) RMD was already paid or your husband was still working for the company at the end of 2022, meaning that he died before his required beginning date for RMDs.

Assuming that what they told you was accurate, the fact that they told you that you would be subject to an RMD for 2024 implies that the spousal 401(k) is an inherited account subject to annual beneficiary RMDs using the Single Life Expectance table.  It seems to me that it would make sense to do a direct rollover from the spousal 401(k) to your IRA (or another IRA) to delay RMDs until the year you reach age 73 (2025?) and your RMDs then will be lower using the Uniform Lifetime table.  It's rare that it would make sense for a spouse beneficiary over age 59½ to maintain a qualified retirement account as inherited.

If the 401(k) includes investments in company stock, there might be the possibility of NUA treatment that could result in the appreciation in the stock being taxed at capital-gains rates rather than as ordinary income.  You might ask the plan about the stock's cost basis if NUA treatment is a possibility.  (I don't know if the plan treated the movement to the spousal 401(k) as a nonreportable transaction or as a rollover.  If it was a rollover, I expect that that that would disqualify the use of NUA treatment.  Ask the plan if you will be receiving a Form 1099-R for the movement of the funds to the spousal IRA.)