Life and Death Planning for Retirement Benefits

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42 Life and Death Planning for Retirement Benefits
beneficiary (or over a period not extending beyond the life expectancy of such employee or the
life expectancy of such employee and a designated beneficiary).”
1.3.03 Lifetime RMDs: Much-younger-spouse method
As generous as the Uniform Lifetime Table is, the participant enjoys even smaller RMDs
if his sole beneficiary is his more-than-10-years-younger spouse.
“[I]f the sole designated beneficiary of an employee is the employee’s surviving spouse,
for required minimum distributions during the employee’s lifetime, the applicable distribution
period is the longer of the distribution period determined in accordance with [the Uniform Lifetime
Table] or the joint life expectancy of the employee and spouse using the employee’s and spouse’s
attained ages as of the employee’s and the spouse’s birthdays in the distribution calendar year.”
Reg. A-4(b) (emphasis added). Note that this formulation mandates annual
recalculation A)) of the participant’s and spouse’s life expectancies.
dsmaller RMDs than the Uniform Lifetime Table if the spouse-beneficiary was born in a
year more than ten years later than the year of the participant’s birth. For example, if the participant
was born in 1941, the joint table will provide larger divisors than the Uniform Lifetime Table if
the spouse was born in 1952 or later.
See regarding separate accounts; and note the following additional points
regarding this method:
A. No election required. The participant does not have to elect to use the joint life expectancy
of the participant and spouse as his ADP. If the participant’s spouse is his sole beneficiary,
then the participant’s divisor is automatically the ADP determined under the Uniform
Lifetime Table, or under the Joint and Last Survivor Table, whichever is larger.
B. Tests for whether spouse is sole beneficiary. The spouse is the sole Designated
Beneficiary for purposes of determining the participant’s RMDs “if the spouse is the sole
beneficiary of the employee’s entire interest at all times during the distribution calendar
year.” Reg. A-4(b)(1). Marital status is determined on January 1 of each
Distribution Year for purposes of computing that year’s RMD; therefore the death of either
spouse, or a divorce, during the Distribution Year does not cause the spouse to lose her
status as “spouse” until the following calendar year. The spouse is deemed to be the “sole
beneficiary” for the entire year if she is the sole beneficiary on January 1 of the year and
the participant does not change his beneficiary designation prior to the end of the calendar
year (or prior to the spouse’s death, if earlier). Reg. A-4(b)(2). “Sole
beneficiary” means sole primary beneficiary; see
C. Post-RBD changes permitted. It is not required that the participant and spouse be married
on the RBD or any other date prior to January 1 of the Distribution Year in question. If the
participant has named some other beneficiary, he can change the beneficiary to his spouse
(or marry after his RBD and name his new spouse as beneficiary); the determination of
which table applies is made separately each Distribution Year.
1.3.04 Taking distributions from multiple plans