IRA owner (age 92) dies in 2006 without distributing 2006 RMD. Primary beneficiary was spouse who dies in 2006 shortly after IRA owner dies. Two children were contingent beneficiaries of original IRA owner. IRA account not yet changed over to spouse/beneficiary before her death.

1.) I understand that there must be a RMD for 2006 using original IRA owner life expectancy, but who has to include as income deceased spouse/beneficiary or contingent beneficiaries?

2.) Is deceased spouse beneficiary ignored all together?

Check the hierarchy of beneficiaries in the plan language.

Generally the contingent beneficiary has no rights if the primary beneficiary is alive at the time of the original account owner's death.(But not always)

The plan language should determine who gets the benefit. Also, check the simultaneous death statute in the state. If its determined that they died at the same time then the primary would generally be deemed to die prior to the account owner.

Again, check the plan language first.

You need to read the IRA document and perhaps consult with an attorney to determine who will be the payee since the terms of the document will control. No one can give you advice. RMD regs only require that the RMD be paid to the beneficary who is the beneficiary on the date of death of the IRA owner, even if the beneficary dies prior to sept 30 of the following yr w/out disclaiming.