When a spouse dies, checking whether they took their required minimum distribution probably isn’t anywhere near the top of the family’s immediate to-do list. Unfortunately, the tax rules don’t disappear just because the retirement-account owner died before making the withdrawal. If an IRA owner dies after RMDs were required to begin and hasn’t completed that year’s distribution, the IRS says the beneficiary is responsible for figuring out and distributing the remaining amount. That makes a year-of-death RMD one of those easily overlooked financial details that can surface months after a family thought the retirement accounts had been handled.
So, who has to handle the RMD if your spouse dies? Here’s what you need to know.
First Determine Whether an RMD Was Required at All
The deceased person’s age and required beginning date matter before you calculate anything. Traditional IRA, SEP IRA, and SIMPLE IRA owners currently subject to the age-73 rule generally must begin RMDs at 73, but SECURE 2.0 phases in age 75 for younger generations. That’s why the deceased owner’s birth year and actual required beginning date (not simply whether they were “in their 70s”) need to be checked.
The IRS RMD FAQs explain that some workplace-plan participants can delay RMDs until retirement, although that exception doesn’t apply to certain owners of the business sponsoring the plan. If your spouse died before their required beginning date, IRS Publication 590-B says there is no RMD for the year of death from an IRA. So don’t automatically withdraw money simply because your spouse was in their 70s; first establish whether an RMD was actually due.
If an RMD Was Due, the Beneficiary Generally Finishes It
Suppose your spouse was already subject to RMDs and died in August without taking the year’s required withdrawal. The IRS says the RMD due for the year of death is the amount the owner was required to withdraw but had not withdrawn before dying. If your spouse had already withdrawn part of the year’s requirement, only the remaining amount needs to be addressed rather than taking the entire RMD again. IRA beneficiaries are responsible for figuring and distributing the owner’s RMD in the year of death when the owner died on or after the required beginning date. In other words, death doesn’t erase an unfinished year-of-death RMD.
The Calculation Still Uses the Deceased Owner’s RMD
One particularly important trap is assuming the surviving spouse should immediately calculate the unfinished withdrawal using their own age. That’s generally not how the year-of-death RMD works. The deceased IRA owner’s RMD for that year is generally figured as though the owner had lived for the entire year. If a surviving spouse becomes the IRA owner during the same year, IRS Publication 590-B specifically says not to calculate that year’s RMD using the survivor’s life expectancy; the deceased owner’s remaining RMD still has to be taken. The rules governing the surviving spouse’s own future RMDs are a separate question from finishing the deceased spouse’s final required distribution.
Don’t Confuse the Year-of-Death Rule With the Inherited-IRA Rules
Families can easily get lost because two different sets of RMD questions may arise at almost the same time. The first is whether the deceased account owner left an unfinished year-of-death RMD, while the second is what distributions the beneficiary must take in future years. Beginning in the year after the owner’s death, RMD requirements depend on the type of beneficiary and the distribution option that applies. A surviving spouse who is the sole beneficiary generally has more options than a non-spouse beneficiary, including circumstances in which the spouse may treat an inherited IRA as their own.
For example, suppose the deceased spouse’s RMD for the year was $12,000, and bank records show that $7,000 had already been distributed before death. The remaining year-of-death obligation would generally be $5,000, not another $12,000. That is why beneficiaries should review the deceased spouse’s year-to-date IRA distributions before requesting another withdrawal. Finish analyzing the deceased owner’s final RMD first, then determine how the account should be handled going forward.
The first-RMD year deserves extra attention because the normal deadline can differ from later years. An account owner generally can delay the first RMD until April 1 of the following calendar year, while subsequent RMDs are generally due by December 31. If a spouse dies around that first-RMD period, don’t assume that seeing no withdrawal on the year’s statements means nothing was required. Ask the custodian or tax professional to determine exactly which RMD obligation was outstanding.
A Surviving Spouse Has Options That Other Beneficiaries Don’t
Being married to the deceased account owner can materially change what happens after the year of death. A surviving spouse who is the sole beneficiary of an IRA may be able to elect to be treated as the account owner rather than merely as its beneficiary. Depending on the circumstances, keeping the account as inherited or treating it as the survivor’s own can affect when future RMDs begin and how they’re calculated. The correct choice can depend on the survivor’s age, the deceased spouse’s age, whether distributions had already begun, and the survivor’s financial needs.
That flexibility can have real financial value. For example, when an IRA owner dies before distributions were required to begin and the surviving spouse is the sole designated beneficiary, the spouse may in some circumstances delay inherited-account RMDs until the year the deceased spouse would have reached the applicable RMD age. That can make the choice between keeping an inherited IRA and moving the assets into the survivor’s own IRA much more consequential than simply deciding whose name appears on the account.
Workplace Retirement Accounts Can Require Another Phone Call
Don’t assume the exact IRA procedure automatically applies to your spouse’s 401(k), 403(b), or other employer-sponsored retirement account. The IRS notes that the plan document establishes available distribution options for qualified retirement plans and recommends that beneficiaries contact the plan administrator. Workplace plans also have their own rules governing when participants must begin distributions, particularly when someone continued working beyond the usual RMD age.
This is also where account type matters. RMDs from multiple traditional, SEP, SIMPLE, and SARSEP IRAs can generally be aggregated and taken from one or more of those IRAs, but RMDs from employer retirement plans generally must be satisfied separately from each plan. A surviving spouse shouldn’t assume that taking extra money from one IRA automatically fixes an unfinished RMD associated with a deceased spouse’s 401(k).
If your spouse had multiple retirement accounts, make a list of every traditional IRA and employer plan rather than assuming one distribution resolves everything. Generally, RMD requirements for qualified plans apply individually to each plan.
Missing the Deadline Can Become Expensive
An unfinished RMD is worth addressing promptly because the IRS can impose an excise tax when required distributions aren’t taken correctly. According to the IRS, the excise tax on an RMD shortfall can be 25% of the amount that wasn’t distributed as required, potentially falling to 10% when the shortfall is corrected within the applicable correction window. Form 5329 may be required to report an RMD shortfall and related tax. Given the complexity surrounding a death, beneficiaries who discover a missed deadline should consider getting tax advice rather than assuming the situation can’t be corrected.
There is also potential relief that grieving families should know about: the IRS says the excise tax may be waived when the shortfall resulted from reasonable error and reasonable steps are being taken to correct it. That doesn’t mean a waiver is automatic, but it is an important reason to address a discovered RMD problem rather than assuming the family simply owes the maximum penalty.
Keeping statements showing distributions your spouse already received during the year will also make determining any remaining year-of-death RMD considerably easier.
One RMD Question Can Prevent a Bigger Tax Problem
Before requesting a distribution, gather the deceased spouse’s December 31 prior-year account statement, year-to-date distribution records, date of birth, date of death, beneficiary designation, and information about any other IRAs or workplace plans. Then ask the custodian specifically, “Was an RMD required for the year of death, how much was required, how much was already distributed, and what remains?” Don’t rely solely on the balance showing in the inherited account because that number doesn’t tell you whether part of the year’s RMD was already taken before death.
After a spouse dies, start with three facts: the type of retirement account, whether the deceased owner had reached their required beginning date, and how much they had already withdrawn that calendar year. If the owner died before their required beginning date, an IRA generally doesn’t have a year-of-death RMD, but future beneficiary distribution rules still need to be considered. If the owner died on or after that date, the beneficiary generally must make sure the remaining required amount for that year is distributed. From there, a surviving spouse can evaluate the separate options for handling the inherited account in future years, ideally with the custodian, plan administrator, and a qualified tax professional when the situation is complicated.
If you’ve handled a spouse’s retirement accounts after a death, was the year-of-death RMD something anyone warned you to check? Share your experience in the comments.
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