Life and Death Planning for Retirement Benefits

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50 Life and Death Planning for Retirement Benefits
This ¶ 1.5 covers only the post-2002 RMD rules applicable to defined contribution (DC)
or “individual account” plans. Regarding defined benefit plans or annuity payouts, see
Regarding earlier years, see
Instead of this ¶ 1.5, see for benefits subject to a “TEFRA 242(b) election,” or
for pre-1987 403(b) plan balances.
1.5.01 Post-death RMD rules: Basics and overview
Post-death RMDs after 2002 are determined under the final regulations
regardless of when the participant died. When determining RMDs from the account of a
participant who died prior to 2002, “the designated beneficiary must be redetermined....and the
applicable distribution period ...must be reconstructed” in accordance with the post-2002 rules
described here. Reg. A-2(b)(1).
In the Code, “required beginning date” refers only to the starting date for lifetime
distributions to the participant . The date by which post-death distributions to the beneficiary
must begin does not have an official name; compare and with
In this book, Required Commencement Date means the deadline by which a beneficiary must
start taking distributions.
The basic concept of the post-death RMD rules is simple: The participant’s retirement
benefits can be depleted gradually through annual distributions (beginning the year after the year
of the participant’s death) over the life expectancy of the participant’s “Designated Beneficiary.”
¶ 1.5.05. This is called the “life expectancy ” (or “stretch”) payout method and is generally
considered a favorable way to distribute benefits, for reasons explained at Alternatively,
as is always true under the minimum distribution rules, the account can be depleted by any more
rapid schedule of distributions; see #4.
As we will see, this simple concept gets complicated in its application.
1.5.02 Road Map for determining post-death RMDs
To calculate required minimum distributions RMDs) after the participant’s death, START
HERE and complete Steps 1 through 6. The chart at Step 7 will then tell you how to compute
RMDs for your particular beneficiary, decedent, and plan. However, the plan is not required to
allow all the payout options that the tax law permits; see
For “double deaths” (the participant died; the beneficiary survived the participant; and then
the beneficiary also died, before having withdrawn all of the money in the plan), FIRST determine
RMDs applicable on the participant’s death using this plus either or
whichever is applicable. THEN proceed to what happens on the beneficiary’s later death, using
AND either:
 E) or C) (whichever is applicable), if the participant’s sole beneficiary
was his surviving spouse; or
 if the participant’s surviving spouse is not the sole beneficiary.
Step 1: Gather basic information you will need in every case to complete the rest of the steps: