Life and Death Planning for Retirement Benefits

Chapter 3: Marital Matters

153

eliminated (via distribution or disclaimer, for example) by September 30 of the year after the year of the participant’s death (the “Beneficiary Finalization Date”; see ¶ 1.8.03 ), the spouse would be considered the sole beneficiary for minimum distribution purposes and options B and C above would also be available. Similarly, if the surviving spouse is not the sole beneficiary as of the date of death, but is one of multiple beneficiaries who have fractional or percentage shares, and the inherited account is divided into separate “inherited accounts” payable to the respective multiple beneficiaries no later than December 31 of the year after the year of the participant’s death, the spouse would be considered the sole beneficiary of the separate account payable to her for minimum distribution purposes, and Options B and C would be available; see ¶ 1.8.01 . If the surviving spouse is just one of multiple beneficiaries as of the Beneficiary Finalization Date, and the separate accounts rule does not apply, see ¶ 1.5.03 (F) or ¶ 1.5.04 (F) for how to compute RMDs. E. If benefits are payable to an estate or trust of which the spouse is a beneficiary. See ¶ 3.2.09 regarding availability of the spousal rollover. If the benefits are not rolled over by the surviving spouse “through” the estate or trust as described at ¶ 3.2.09 , use the Road Map at ¶ 1.5.02 to compute RMDs. F. Spousal Roth conversion . The surviving spouse has the option to convert inherited benefits to a Roth IRA. See ¶ 3.2.04 . G. If the surviving spouse-beneficiary dies after the participant. If the participant dies leaving benefits to the surviving spouse, and then the surviving spouse also dies, see ¶ 3.1.03 for the effect of simultaneous deaths clauses; ¶ 4.4.12 for the ability of the surviving spouse’s executor to disclaim benefits on her behalf; ¶ 3.2.05 and ¶ 4.1.02 for the extent (if any) to which the surviving spouse’s executor can exercise the now-deceased surviving spouse’s rollover and election rights; and ¶ 1.6.03 (E) or ¶ 1.6.05 (C) regarding RMDs in the year of the surviving spouse’s death and thereafter. H. Other pitfalls and considerations. If the participant died before his Required Beginning Date (¶ 1.4) , be aware of the deadline the spouse may face regarding electing between the life expectancy payout method and the 5-year rule; see ¶ 3.2.06 , last paragraph. If the surviving spouse inherits, in 2010 or 2011, a Roth IRA that was created by a 2010 conversion, see ¶ 5.4.05 . 3.1.03 Simultaneous death clauses If the participant names his spouse as beneficiary, and they die simultaneously or within a short time of each other, it may be presumed under applicable state law or under the plan documents that the spouse predeceased the participant; see ¶ 1.7.07 . A presumption that the spouse survived the participant, if contained in the participant’s will or trust, will NOT govern retirement benefits payable directly to the spouse. To be effective, the presumption would have to be contained in the designation of beneficiary form; see ¶ 1.7.02 . Such a presumption may be used, if the spouse’s estate is smaller than the participant’s, to equalize the estates for estate tax purposes.