Life and Death Planning for Retirement Benefits

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Life and Death Planning for Retirement Benefits

lifetime distribution rules apply through the year of death); minus what he actually did take in that year. “Thus, a required minimum distribution, determined as if the employee had lived throughout that year, is required for the year of the employee’s death and that amount must be distributed to a beneficiary to the extent it has not already been distributed to the employee.” Reg. § 1.401(a)(9)-5 , A-4(a). The beneficiary owns the account once the participant dies, and the participant’s estate has no right to take any distribution from it (unless the estate is the beneficiary). See PLR 1999-30052, paragraph [4]. For the effect of a qualified disclaimer on the year-of-death RMD, see ¶ 4.4.10 . For who takes the year-of- death RMD if there are: multiple beneficiaries with respect to one plan or IRA, see ¶ 1.7.06 (A); or with respect to multiple IRAs payable to one beneficiary or to different beneficiaries, see ¶ 1.5.09 . B. Surviving spouse is sole beneficiary. If the participant died on or after his RBD, leaving his benefits to his surviving spouse as sole beneficiary, the ADP is the surviving spouse’s life expectancy, or what would have been the life expectancy of the deceased participant, whichever is longer. Reg. § 1.401(a)(9)-5 , A-5(a)(1). See ¶ 1.6.02 for meaning of “spouse is sole beneficiary.” See ¶ 1.6.03 (D) for how to calculate annual distributions over the spouse’s life expectancy. See ¶ 1.6.04 for when distributions to the spouse must commence. See ¶ 1.5.08 for how to calculate RMDs based on what would have been the participant’s life expectancy and when such distributions must commence. See ¶ 1.6.03 (E) for what happens if the spouse, having survived the participant, dies before having withdrawn all of the benefits. The surviving spouse can also roll over the inherited benefits to another retirement plan; see ¶ 3.2. 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 on or after his RBD, leaving his benefits to one individual beneficiary who is not the participant’s surviving spouse, the ADP is the individual beneficiary’s life expectancy, or (if greater) the life expectancy of the deceased participant. Reg. § 1.401(a)(9)-5 , A-5(a)(1). 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 ¶ 1.5.08 for how to calculate RMDs using what would have been the participant’s life expectancy 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 on or after his RBD, leaving his benefits to a trust that qualifies as a “see-through trust” under the IRS’s minimum distribution trust rules ( ¶ 6.2.03 ), the ADP is the life expectancy of the oldest beneficiary of the trust, or (if greater) the life expectancy of the deceased participant. Reg. § 1.401(a)(9)-5 , A-5(a)(1), A-7(a)(1), § 1.409(a)(9)-4, A-5. If the sole beneficiary of the trust is the participant’s surviving spouse, see ¶ 1.6.03 (D) for how to calculate annual distributions over the spouse’s life expectancy and ¶ 1.6.04 for when distributions to the trust must commence. See ¶ 1.6.06 for how to determine whether the spouse is considered the “sole beneficiary” of the trust. If the spouse is not the sole beneficiary of the trust, see ¶ 1.5.05 for how to calculate annual distributions over life expectancy of a nonspouse individual beneficiary (this method applies even if the spouse is the oldest of the multiple individual beneficiaries) and when