Life and Death Planning for Retirement Benefits

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Chapter 1: The Minimum Distribution Rules 57
such distributions must commence. See for how to compute RMDs based on what
would have been the participant’s life expectancy and when such distributions must
commence.
E. Estate, non-see-through trust, or other nonindividual beneficiary. If the participant
died on or after his RBD, leaving his benefits to his estate or other
“nonindividual” beneficiary, including a trust that does not qualify as a “see-through trust”
, then the participant has “no Designated Beneficiary,” and the no-DB rule
applies. Reg A-3. The “no-DB rule” that applies in the case of death after
the RBD is that the ADP is what would have been the participant’s remaining life
expectancy. Reg. A-5(a)(2). Se for how to compute RMDs based
on what would have been the participant’s life expectancy and when such distributions
must commence.
F. Multiple beneficiaries. If the participant died on or after his RBD, leaving his benefits to
multiple beneficiaries, see A) regarding the RMD for the year of the participant’s
death. Then determine whether the separate accounts rule applies for ADP purposes for
years after the year of the participant’s death; see B). If the separate accounts rule
does apply for that purpose, then, for years after the year of the participant’s death,
determine RMDs for each separate account using the rules in these subparagraphs B–F
based solely on the beneficiary(ies) of such separate account. If there are multiple
beneficiaries whose interests do not constitute separate accounts for purposes of
determining the ADP, then two rules apply. First, unless all the beneficiaries are individuals
or see-through trusts, the participant is deemed to have “no Designated Beneficiary” and
the “no-DB rule” applies, which is: The ADP is what would have been the participant’s
remaining single life expectancy. Reg. A-3 (third sentence)
A-5(a)(2). See for how to compute RMDs based on what would have been the
participant’s life expectancy and when such distributions must commence. Second, if all
of the beneficiaries are individuals (or qualifying see-through trusts; see , the ADP
is either the life expectancy of the oldest Designated Beneficiary (see ¶ 1.5.05 for how to
compute) or (if greater) what would have been the remaining life expectancy of the
participant . Reg A-5(a)(1), A-7(a)(1).
1.5.05 RMDs based on life expectancy of Designated Beneficiary
Reg. A-5(c)(1), tells us how to compute RMDs when the ADP is the life
expectancy of an individual Designated Beneficiary. This is the so-called “life expectancy payout
method” (also called the “life expectancy of the beneficiary,” “stretch payout,” or “stretch IRA”
method). This method applies when the participant died either before or after the RBD, and:
 Benefits are left to an individual nonspouse Designated Beneficiary and the ADP
is the beneficiary’s life expectancy. See C) C).
 Benefits are left to multiple Designated Beneficiaries whose interests are not treated
as separate accounts for ADP purposes B)) and the ADP is the life
expectancy of the oldest beneficiary. B), C).
 Benefits are left to a “see-through trust” of which the surviving spouse is not sole
beneficiary, and the ADP is the life expectancy of the oldest trust beneficiary.
D), D).