Required Minimum Distributions and Beneficiary Planning Flashcards
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Read the first 7 Required Minimum Distributions and Beneficiary Planning flashcards as text
Under the SECURE Act, within what maximum time period must most non-spouse beneficiaries fully distribute an inherited IRA?
Answer: 10 years
The SECURE Act replaced the stretch IRA for most non-spouse beneficiaries with a 10-year rule, requiring full distribution within 10 years of the original owner's death.
Which of the following individuals qualifies as an 'Eligible Designated Beneficiary' (EDB) under the SECURE Act, allowing use of the life expectancy stretch?
Answer: A chronically ill individual
EDBs include surviving spouses, minor children of the owner, disabled individuals, chronically ill individuals, and those not more than 10 years younger than the deceased owner.
Which unique option does a surviving spouse beneficiary have when inheriting a deceased spouse's IRA that other beneficiaries do not?
Answer: Rolling over the inherited IRA directly into their own IRA
A surviving spouse can roll over inherited IRA assets into their own IRA, becoming the account owner and deferring RMDs until their own Required Beginning Date.
If an IRA owner dies before their Required Beginning Date with no named beneficiary, what distribution rule generally applies?
Answer: 5-year rule
When no designated beneficiary exists and the owner dies before the RBD, the 5-year rule applies, requiring complete distribution by December 31 of the fifth year after the owner's death.
What is a 'see-through trust' (or 'look-through trust') in the context of IRA beneficiary planning?
Answer: A trust meeting IRS requirements so its individual beneficiaries are treated as designated beneficiaries for RMD purposes
A see-through trust meets four IRS requirements allowing the IRS to look through the trust to its individual beneficiaries, enabling those beneficiaries to use their life expectancy for distribution calculations in applicable situations.
When an original IRA owner dies after their Required Beginning Date and leaves the account to a non-spouse beneficiary subject to the 10-year rule, what does IRS guidance require regarding annual distributions?
Answer: Annual RMDs must be taken in years 1 through 9, with any remaining balance distributed by end of year 10
Per IRS final regulations, when the original owner died after the RBD, non-spouse beneficiaries subject to the 10-year rule must take annual RMDs in years 1–9 and distribute the remaining balance by the end of year 10.
What is a 'qualified disclaimer' and why might an IRA beneficiary use one?
Answer: An irrevocable refusal of inherited assets within 9 months, causing them to pass to the contingent beneficiary
A qualified disclaimer is an irrevocable refusal of all or part of inherited assets, filed within 9 months of death, which causes the disclaimed assets to pass to the contingent beneficiary as if the disclaiming party had predeceased the owner.