Life and Death Planning for Retirement Benefits

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Life and Death Planning for Retirement Benefits

A. RMD for year of death (regardless of who is beneficiary). Because the participant died before his RBD, there is no RMD for the year of his death. See ¶ 1.4.07 (C). Required distributions will begin, at the earliest, the year after the year of the participant’s death. B. Surviving spouse is sole beneficiary. If the participant died before his RBD, leaving his benefits to his surviving spouse as sole beneficiary, the ADP during the surviving spouse’s life is the surviving spouse’s life expectancy, unless the 5-year rule applies. Reg. § 1.401(a)(9)-3 , A-1(a), third sentence. See ¶ 1.5.07 for how to determine whether the 5- year rule applies; see ¶ 1.5.06 for how to calculate distributions under the 5-year rule. See ¶ 1.6.02 for meaning of “spouse is sole beneficiary.” See ¶ 1.6.03 for how to calculate RMDs based on the spouse’s life expectancy. See ¶ 1.6.04 for when distributions to the spouse must commence (Required Commencement Date). See ¶ 1.5.12 and ¶ 1.6.05 for what happens if the spouse, having survived the participant, dies before that Required Commencement Date. See ¶ 1.5.12 and ¶ 1.6.03 (E) for what happens if the spouse, having survived the participant and lived beyond the Required Commencement Date, dies before having withdrawn all of the benefits. See ¶ 3.2 for the surviving spouse’s ability to roll over the inherited benefits to another retirement plan; see ¶ 1.6.03 (A), (B), for RMD effects of such a rollover. C. Individual beneficiary who is not the surviving spouse. If the participant died before his RBD, leaving his benefits to one individual beneficiary who is not the participant’s surviving spouse, the ADP is the beneficiary’s life expectancy, unless the 5-year rule applies. Reg. § 1.401(a)(9)-3 , A-1(a), third sentence. See ¶ 1.5.07 for how to determine whether the 5-year rule applies, ¶ 1.5.06 for how to calculate distributions under the 5-year rule. See ¶ 1.5.05 for how to calculate annual distributions over the life expectancy of a nonspouse individual beneficiary and when such distributions must commence. See ¶ 1.5.12 – ¶ 1.5.13 , for what happens if the beneficiary, having survived the participant, dies before having withdrawn all of the benefits. D. See-through trust. If the participant died before his RBD, leaving his benefits to a trust that qualifies as a “see-through trust” under the minimum distribution trust rules ( ¶ 6.2.03 ), then the individual beneficiary(ies) of the trust is (or are) treated (for most but not all purposes) as the participant’s Designated Beneficiary(ies). If the sole beneficiary of the trust is the participant’s surviving spouse, the ADP is the spouse’s life expectancy (see See ¶ 3.2 regarding the ability of the participant’s surviving spouse to roll benefits over to her own IRA (or elect to treat an inherited IRA as her own); such a rollover or election would change the RMD rules applicable to the rolled over benefits; see ¶ 1.6.03 (A), (B), for RMD effects. General Comments and Caveats Post-death RMDs from a Roth IRA are always determined using rules in this ¶ 1.5.03 (never ¶ 1.5.04 ). Reg. § 1.408A-6 , A-14(b). In all cases, see ¶ 1.5.10 for the ability of the plan to require faster distribution of the benefits than the RMD rules would allow.