Life and Death Planning for Retirement Benefits

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Life and Death Planning for Retirement Benefits

retired prior to his death and whether he was a “5-percent owner” with respect to that plan. See ¶ 1.4.03 – ¶ 1.4.06 .

 If the plan is a 403(b) plan, is there a pre-1987 account balance in the plan? If so, see ¶ 1.4.05 ; this Road Map will not work for the pre-1987 balance.

 If the plan is a QRP, did the participant have a TEFRA 242(b) election in effect since 1983? If so, see ¶ 1.4.08 ; this Road Map will not work for these benefits.

Step 3: Determine whether the participant died before, on, or after the RBD. See ¶ 1.4 . If the decedent died BEFORE his RBD, use ¶ 1.5.03 to determine post-death RMDs. If the decedent died AFTER his RBD, use ¶ 1.5.04 . Death on the RBD is treated as death after the RBD. Reg. § 1.401(a)(9)-2 , A-6(a).

 If the plan is a Roth IRA , the death is always before the RBD, because Roth IRAs have no RBD. ¶ 5.2.02 (A).

 If the participant died before April 1 of the year following the year in which he reached (or would have reached) age 70½ then he died BEFORE his RBD for all plans. See ¶ 1.4.07 (C).

 If he died on or after that date, see ¶ 1.4 for how to determine the RBD for each of the decedent’s plans; the RBD is not always easy to determine in this case, because different types of plans have different RBDs. The participant may have died before his RBD under some of his retirement plans but after the RBD for other plans. For the most confusing situations, see: ¶ 1.4.04 , qualified plan’s RBD is earlier than statutory RBD; and ¶ 1.2.06 (C), new IRA created via rollover or transfer. Step 4: Are you computing the RMD for the year of death, or for a later year? If you are computing the RMD for the year of the participant’s death, see ¶ 1.5.03 (A) (if participant died before his RBD), ¶ 1.5.04 (A) (if participant died on or after his RBD), and ¶ 1.7.06 (A) (if there are multiple beneficiaries); and skip the rest of this ¶ 1.5.02 . If you are computing RMDs for years AFTER the year of the participant’s death, go on to Step 5. Step 5: Are there are multiple beneficiaries? If there are multiple beneficiaries, you need to determine whether the “separate accounts rule” applies for purposes of determining the beneficiaries’ ADPs. See ¶ 1.8.01 (B). If the beneficiaries’ interests constitute separate accounts for ADP purposes, then the beneficiary (and resulting ADP) are determined separately for each such separate account and the distribution options described in ¶ 1.5.03 (B)–(F) or ¶ 1.5.04 (B)–(F) (whichever is applicable) apply to each separate account . If there are multiple beneficiaries whose interests do not qualify as separate accounts for ADP purposes, then the distribution options are as described at ¶ 1.5.03 (F) or ¶ 1.5.04 (F), whichever is applicable.

Step 6: Do the benefits pass to a Designated Beneficiary, and if so who? See ¶ 1.7.03 for the definition of Designated Beneficiary. Note that the identity of the beneficiary is not finally fixed,