Reducing Required Minimum Distributions from a Defined Contribution Plan: The Spousal Rollover IRA

When a participant in a defined contribution plan passes away, the required minimum distributions (RMDs) may increase depending upon the beneficiary’s age, the participant’s decisions, and the relationship between the participant and the beneficiary. However, if the beneficiary is indeed the participant’s spouse, there are special rules that allow them to act as if they were a participant in the plan. This could mean naming another beneficiary, lowering the RMDs, and electing to have a longer payout period.

The surviving spouse may also decide to roll over the participant’s plan into a designated IRA, aptly called a “spousal rollover IRA.” To qualify, ” the surviving spouse must be the sole designated beneficiary of the account and must have the right to withdraw the full amount of the account balance at any time.” The RMDs would then be calculated as if the surviving spouse was in fact the IRA owner.

See James Damon and Julie Edmond, Reducing Required Minimum Distributions from a Defined Contribution Plan: The Spousal Rollover IRA, National Law Review, May 31, 2018/

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.