He Asked Whether His Rollover IRA RMDs Are Taxed. They Are, and Losing His Wife a Year Ago Made Them Cost More
Losing a spouse triggers a little-known IRS shift that can push a retiree into a higher bracket on the exact same income, and at 81 with RMDs he cannot delay, this widower is about to feel it.
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Yes, the required minimum distributions from your rollover IRA are taxed as ordinary income. Federal law says “any amount paid or distributed out of an individual retirement plan shall be included in gross income”. That applies in full to the reader who wrote in, telling us in his email that he is 81 and lost his wife about a year ago.
The word rollover confuses a lot of retirees. It only describes how the money moved, from a 401(k) or pension into an IRA. When that move is done as a rollover, the amount transferred “shall not be includible in gross income in the taxable year in which paid”, so the tax deferral simply carries on. The money went in untaxed, grew untaxed, and gets taxed on the way out.
He is also well past age 73, when required distributions must start under current law, so he has no way to delay them. The more useful question is why this year’s distribution will probably cost him more than it did while his wife was alive.
Same Withdrawal, Bigger Tax Bill: How the Widow’s Penalty Works
Planners call this the widow’s penalty, or survivor’s penalty. A surviving spouse can still file a joint return for the year of death, and the IRS calls it the last year for which you can file jointly. After that, the survivor files single. The one exception is qualifying surviving spouse status, which requires a dependent child at home and is available for only 2 years following the year your spouse died. For him, 2026 is most likely his first year filing single.
Under IRS figures for tax year 2026, three things shrink at the same time:
- Standard deduction. It drops from $32,200 for a married couple filing jointly to $16,100 for a single filer. The extra deduction for being 65 or older also falls from two people’s worth to one.
- Bracket thresholds. The 22% rate starts above $50,400 for single filers, compared with $100,800 on a joint return. The 24% rate starts above $105,700 for individuals, compared with $211,400 for couples.
- Senior deduction. The newer deduction for people 65 and older is worth up to $6,000 per person, or $12,000 when both spouses qualify. It starts to phase out when modified adjusted gross income passes $75,000 for single filers, compared with $150,000 for married couples.
His income usually falls by less than those thresholds do. Social Security keeps the larger of the two checks and stops the smaller one. The Social Security Administration estimates the average aged couple gets $3,208 a month in 2026, compared with $1,919 for an aged widow or widower living alone. His RMD stays linked to his balance and his age. If he chose to treat his wife’s IRA as his own, which a surviving spouse who is the sole beneficiary can do, the RMD is now calculated on a bigger balance.
What the Penalty Looks Like on Real Income
Say his RMD, pension and the taxable part of his Social Security add up to about $70,000 of taxable income. On a joint return, none of it would reach the 22% bracket. Filing single, about $19,600 of it is taxed at 22% instead of 12%. The money coming in is the same. The tax on it is higher.
Lower incomes get hit too. An Epoch Times explainer described a survivor whose income fell to $51,000 and who still landed in the 22% bracket as a single filer.
The widow’s penalty is one of nine IRS rules that quietly drain retirement accounts after a spouse dies, and we charted all of them in a free retiree’s tax trap map.
One Lever Still Open to Him at 81
He can still redirect part of the distribution. A qualified charitable distribution sends money straight from the IRA trustee to a qualifying charity. The owner must be at least 70½, and the amount stays out of gross income, up to $108,000 for tax year 2025. Lower adjusted gross income can also help him keep more of the senior deduction and reduce how much of his Social Security gets taxed.
This only helps someone who already plans to give. Sending money to charity just to cut a tax bill still leaves him with less money overall. If he gives to his church or other causes every year, though, giving straight from the IRA is clearly the better option.
His Checklist Before the Next Distribution
First, before this year ends, get a projection of his 2026 return as a single filer and compare it with the withholding on his RMD. Many surviving spouses still have withholding set for a joint return, and they find the gap the following April. Raising withholding on the remaining RMD now is the easiest fix.
Second, if he gives to charity, set up those gifts as qualified charitable distributions before he takes the rest of this year’s RMD, and do it at the start of 2027 as well. The common mistake is taking the whole RMD as cash and then writing checks to charity. Once the cash has been withdrawn, it counts as income, and a check written later does far less to reduce his tax bill than a gift sent straight from the IRA.
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Jake has been been working in financial media for almost 15 years. He focuses on all things personal finance for 24/7 Wall St. with high hopes to educate and entertain. Most recently, Jake spent 12 years working various roles at The Motley Fool. He started copy editing fool.com content, worked on premium and marketing campaigns, and helped launch The Ascent, a personal finance brand.
His work has been featured on platforms like MSN, Yahoo Finance, USA Today, and more. He's written about credit cards, social security, ETFs, savings accounts, and just about anything else you can imagine when thinking about money. Jake love to cook, play golf, and tell people he's never had a cavity. (It's true!)
