Life and Death Planning for Retirement Benefits

Chapter 1: The Minimum Distribution Rules

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meaning the “divisor” for the year after the year of the participant’s death would be 15.3.

 Requires immediate distribution in case of death after age 104. If the participant dies later than the year he turns 104, the beneficiary will have to take out the entire balance in the year after the participant’s death, because after age 104 the single life expectancy declines to less than two, meaning the divisor for the year after the year of the participant’s death would be less than one.  Not available for Roth IRAs or pre-RBD deaths. The “participant’s life expectancy” is never available as an optional ADP in cases of death before the RBD (and never applies to Roth IRAs, as to which death is always “before the RBD”; see ¶ 5.2.02 (A)).  Confusion between Uniform Lifetime Table and Single Life Table. The Uniform Lifetime Table applies during the participant’s life, and also applies for the year of his death ( ¶ 1.5.04 (A)), but has no possible application after that point in computing distributions to a beneficiary. The Single Life Table is the ONLY table used to compute life expectancy payout-RMDs from inherited plans beginning with the year after the year of the participant’s death, regardless of whether the ADP is the beneficiary’s life expectancy ( ¶ 1.5.05 (A)) or the participant’s (this ¶ 1.5.08 ). RMDs must be computed separately with respect to each inherited traditional QRP plan, IRA, Roth IRA, and 403(b) account a beneficiary holds. Reg. § 1.401(a)(9)-8 , A-1; § 1.408-8 , A- 9. Having computed the RMDs separately for each account, the beneficiary has some flexibility regarding which account he actually takes the RMDs from. The RMD from each inherited QRP must be taken from that QRP; multiple QRPs cannot be aggregated with each other for RMD purposes, even if maintained by the same employer. The flexibility pertains to IRAs and 403(b)s:  The RMDs attributable to all traditional IRAs he inherited from one decedent from any one or more of the traditional IRAs inherited by that beneficiary from that decedent, provided such accounts are all being distributed under the same life expectancy payout period § 1.408-8 , A-9, fourth sentence.  The RMDs attributable to all Roth IRAs he inherited from one decedent from any one or more of the Roth IRAs inherited by that beneficiary from that decedent. Reg. § 1.408A-6 , A-15, third sentence. It would appear prudent to assume that, to be thus Aggregation of inherited accounts for RMD purposes A. Accounts that may be aggregated if held by one beneficiary. A beneficiary can take: