Life and Death Planning for Retirement Benefits

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44 Life and Death Planning for Retirement Benefits
fractional portion of the account of which the spouse is the beneficiary if she is not sole beneficiary
of the participant’s entire account in the plan. Reg. A-2(a)(2).
1.4 The RBD and First Distribution Year
Computing lifetime RMDs (¶ 1.3) is much easier than figuring out when they start. This
explains what the “RBD” and “first Distribution Year” are for various types of retirement plans
and looks at the anomalies created by the disconnect between the first Distribution Year and the
RBD .
1.4.01 Required Beginning Date (RBD); Distribution Year
A year for which an RMD is required is called a “distribution calendar year” in the
regulations (Reg. A-1(b)), a Distribution Year in this book. For plans subject to
the lifetime RMD rules , the “first Distribution Year” is the year the participant reaches
age 70½ (or, in some cases, retires, if later; see . However, if the participant
reached age 70½ (or retired, if later) in 2008 or 2009, see
See C) for the effect of rollovers and IRA-to-IRA transfers.
Normally, the deadline for taking the RMD for a particular Distribution Year is December
31 of such year #2), but, for lifetime distributions only, in the case of the first Distribution
Year, the deadline is April 1 of the following year. Reg. A-1(c). That postponed
deadline for the first year’s RMD is called the Required Beginning Date or RBD
This postponement of the RMD for the first year does not apply to death benefits (¶ 1.5).
The RBD matters mainly for compliance purposes: The participant must start taking RMDs
by that date to avoid penalty . Also, the calculation of post-death RMDs is different
depending on whether death occurred before or after the RBD; se Step 3. The RBD has
little significance for planning purposes.
The starting point for determining the RBD is the attainment of age 70½, which is “the date
six calendar months after the 70th anniversary of the employee’s birth.” Reg. A-
3.
1.4.02 RBD for IRAs and Roth IRAs
The RBD for a traditional IRA is April 1 of the calendar year following the year in which
the participant reaches age 70½, regardless of whether he is “retired.”
Exceptions: For participants who turned age 70½ in 2009, see
B); for certain rollover contributions, see C).
Roth IRAs have no RBD. The participant is never compelled to take distributions from his
Roth IRA. Minimum distribution requirements do not apply to a Roth IRA until after the
participant’s death. See
1.4.03 QRPs: RBD for 5-percent owner
For a participant who is a “5-percent owner,” the RBD for a QRP is the same as the RBD
for a traditional IRA : April 1 of the calendar year following the year in which the