Life and Death Planning for Retirement Benefits

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Chapter 1: The Minimum Distribution Rules 73
payable to successor beneficiaries (see E)). Rather, a new distribution period
starts: The post-death rules o an will be applied “as if the surviving spouse
were the employee” for purposes of determining RMDs to the successor beneficiary(ies) after her
death ...meaning that the benefits will have to be distributed over the life expectancy of the
surviving spouse’s Designated Beneficiary or under the 5-year rule (see .
The (B)(iv)(II) rule is quite confusing, so must be reviewed in detail:
A. Rule applies only if participant died before his RBD. Under the structure o
the (B)(iv)(II) rule can apply only if the participant dies before his RBD. See Reg.
A-1, confirming that and apply only if the
employee (participant) “dies before the employee’s required beginning date (and, thus,
before distributions are treated as having begun in accordance with section
401(a)(9)(A)(ii)).” Reg. A-5(b), reiterates that the special rules of
“(B)(iv)” apply only if the employee dies before his RBD, as does IRS Publication 575
(2009), p. 33. (For the record, in PLR 2009-45011, the IRS erroneously applied the
(B)(iv)(II) rule in a case where the participant died after his RBD.)
B. ... And spouse dies before her Required Commencement Date. The second condition
that must exist for the (B)(iv)(II) rule to apply is that the surviving spouse-sole beneficiary
of the account “dies before the distributions to such spouse begin.”
Under the regulations, the date distributions “begin” means the date distributions are
required to begin, not when they actually begin; and that Required Commencement Date
is December 31 of the year in which the decedent would have reached age 70½ (or of the
year after the year of the participant’s death, if later; see . Reg.
A-3(b), A-5, A-6.
Michelle Example: Michelle died after 2009 in Year 1 at age 68, leaving her IRA to her husband
Bill as sole beneficiary. Had she lived, Michelle would have reached age 70 in Year 3, and would
have reached age 70½ in Year 4, so her RBD would have been April 1, Year 5 . She died
before her RBD, with her spouse as sole beneficiary, so Bill’s Required Commencement Date is
December 31 of Year 4 (the year Michelle would have reached age 70½). To comply with the
minimum distribution rules, Bill takes what would be the Year 4 RMD (computed based on his
life expectancy as beneficiary; se D)) on November 1 of Year 4. He never elects to treat
the IRA as his own . He dies on December 1, Year 4. Because he died before his Required
Commencement Date, the (B)(iv)(II) rule applies; see “C” for how to determine RMDs after Bill’s
death. This is true even though he had actually started taking distributions, because he died before
the date he was required to take distributions.
Grenville Example: Grenville dies after 2009 in Year 1 at age 68, leaving his IRA to his wife
Rowena as sole beneficiary. Had he lived, Grenville would have reached age 70½ in Year 3, so
his RBD would have been April 1, Year 4 . He died before his RBD, with his spouse as
sole beneficiary, so Rowena’s Required Commencement Date is December 31 of Year 3 (the year
Grenville would have reached age 70½; . In order to comply with the minimum
distribution rules, Rowena takes what would be the Year 3 RMD (computed based on her life
expectancy as beneficiary; D)) on November 1 of Year 3. She never elects to treat the
IRA as her own . Rowena dies on January 1, Year 4. Because she died after her Required
Commencement Date, the (B)(iv)(II) rule does not apply; see E) for how to determine