Life and Death Planning for Retirement Benefits

Table of Contents

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9.3.01 Effects of a forbidden modification of series.................................................................. 414 9.3.02 When the no-modification period begins and ends......................................................... 414 9.3.03 Exceptions for death or disability ................................................................................... 415 9.3.04 Changing to RMD method after the SOSEPP commences ............................................ 415 9.3.05 When taking an extra payment is not a modification ..................................................... 415 9.3.06 What other changes do NOT constitute a modification? ................................................ 415 9.3.07 What changes DO constitute a modification?................................................................. 416 9.3.08 Effect of divorce on the SOSEPP ................................................................................... 417 9.3.09 Transfers to, from, or among IRAs supporting a SOSEPP............................................. 417 9.4 O THER E XCEPTIONS TO THE P ENALTY ............................................................................ 418 9.4.01 Death benefits ................................................................................................................. 419 9.4.02 Distributions attributable to total disability .................................................................... 419 9.4.03 Distributions for deductible medical expenses ............................................................... 419 9.4.04 QRPs, 403(b) plans: Early retirement ............................................................................. 420 9.4.05 QRPs, 403(b) plans: QDRO distributions....................................................................... 420 9.4.06 ESOPs only: Dividends on employer stock .................................................................... 420 9.4.07 IRAs only: Unemployed’s health insurance ................................................................... 420 9.4.08 IRAs only: Expenses of higher education....................................................................... 420 9.4.09 IRAs only: First-time home purchase ............................................................................. 421 9.4.10 IRS levy on the account .................................................................................................. 422 9.4.11 Return of certain contributions ....................................................................................... 422 9.4.12 Qualified reservist distributions ...................................................................................... 422 9.4.13 Exceptions for tax-favored disasters ............................................................................... 422 CHAPTER 10: RMD RULES FOR “ANNUITIZED” PLANS ........................................... 423 10.1 T ERMINOLOGY Y OU M UST K NOW ................................................................................... 423 10.1.01 Annuity, deferred and immediate .................................................................................. 423 10.1.02 Meaning of “annuitize” ................................................................................................. 424 10.1.03 Variable vs. fixed annuities ........................................................................................... 424 10.1.04 What a “Defined Benefit plan” is.................................................................................. 425 10.1.05 What a “Defined Contribution plan” is ......................................................................... 426 10.2 RMD S FOR D EFINED B ENEFIT P LANS .............................................................................. 427 10.2.01 Introduction to the DB/annuity RMD rules................................................................... 427 10.2.02 Differences between DB, DC plan rules ....................................................................... 428 10.2.03 Payment intervals; other DB terminology..................................................................... 428 10.2.04 Permitted forms, durations, of annuity .......................................................................... 428 10.2.05 Payments must be nonincreasing, except… .................................................................. 430 10.2.06 Other changes permitted after the ASD ........................................................................ 432 10.2.07 When the annuity payments must commence; the RBD............................................... 433 10.2.08 Converting an annuity payout to a lump sum................................................................ 434 10.2.09 If participant’s ASD is prior to the RBD....................................................................... 435 10.2.10 RMD rules for DB plan death benefits.......................................................................... 436 10.3 B UYING AN A NNUITY I NSIDE AN IRA OR O THER DC P LAN ............................................ 438