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8 Things to Know About Special Spousal Rule That Allows Smaller RMDs

Monday, November 30, 2015

By Sarah Brenner, IRA Technical Expert

If you have a traditional IRA and are age 70 ½ or older this year, you will have to take a required minimum distribution (RMD) from your IRA for 2015. Your 2015 RMD is calculated by dividing your December 31, 2014 IRA balance by a life expectancy factor. You can determine your life expectancy factor by using life expectancy tables issued by the IRS. You can find these tables in IRS Publication 590-B. Most likely, you will use the Uniform Lifetime Table to determine your life expectancy factor. This table uses your age and the age of a hypothetical beneficiary 10 years younger to determine the life expectancy factor you use to calculate your RMD. However, if your much younger spouse is the only beneficiary listed on your IRA for 2015, you may be able to use the special spousal rule. Here are 8 things you need to know about this rule, which may allow you to take a smaller RMD.

  1. If your spouse is your sole beneficiary for 2015 and is more than 10 years younger than you, you may use the Joint Life Expectancy Table to calculate your RMD for 2015, instead of the Uniform Lifetime Table.
  2. You will take the ages you and your spouse will be on your birthdays in 2015 and use the Joint Life Expectancy Table to determine the life expectancy factor, which you will divide into your December 31, 2014 balance. This calculation will give you your 2015 RMD.
  3. Using the Joint Life Expectancy Table will result in a smaller RMD than using the Uniform Lifetime Table.
  4. You may only use the Joint Life Expectancy Table if your spouse beneficiary is more than 10 years younger than you. If your spouse is closer than 10 years apart from you in age, you may not use this table.
  5. If you have more than one primary beneficiary listed on your IRA, you must use the Uniform Table and not the Joint Life Expectancy Table. Contingent beneficiaries do not matter. If you have multiple primary beneficiaries, you must use the Uniform Lifetime Table.
  6. If you change beneficiaries during the year, you may not use the Joint Life Expectancy Table. For example, if you name your spouse who is 15 years younger than you and then later in the year replace him with your daughter, you must use the Uniform Lifetime Table and not the Joint Life Expectancy Table. However, if the change is due to death or divorce, special rules apply. If your spouse dies in 2015, you may still use the Joint Life Expectancy Table for your 2015 RMD. If you divorce in 2015, you may still use the Joint Life Expectancy Table for your 2015 RMD as long as you do not name another beneficiary.
  7. You may be able to use the Joint Life Expectancy Table if a trust is the beneficiary of your IRA and your spouse, who is more than 10 years younger than you, is the sole beneficiary of the trust. Certain requirements must be met. Check with your tax advisor to see if your trust qualifies.
  8. Your IRA custodian is not required to report your 2015 RMD amount to you using the Joint Life Expectancy Table. The custodian is permitted to use the Uniform Lifetime Table for all reporting of RMDs to IRA owners. Be aware that an amount reported to you may, therefore, be more than your actual 2015 RMD.