CRPC Required Minimum Distributions and Beneficiary Planning 2

Question 1

Under the SECURE Act, within what maximum time period must most non-spouse beneficiaries fully distribute an inherited IRA?

Accepted Answer

10 years

Answer

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.

Question 2

Which of the following individuals qualifies as an 'Eligible Designated Beneficiary' (EDB) under the SECURE Act, allowing use of the life expectancy stretch?

Accepted Answer

A chronically ill individual

Answer

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.

Question 3

Which unique option does a surviving spouse beneficiary have when inheriting a deceased spouse's IRA that other beneficiaries do not?

Accepted Answer

Rolling over the inherited IRA directly into their own IRA

Answer

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.

Question 4

If an IRA owner dies before their Required Beginning Date with no named beneficiary, what distribution rule generally applies?

Accepted Answer

5-year rule

Answer

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.

Question 5

What is a 'see-through trust' (or 'look-through trust') in the context of IRA beneficiary planning?

Accepted Answer

A trust meeting IRS requirements so its individual beneficiaries are treated as designated beneficiaries for RMD purposes

Answer

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.

CRPC - Chartered Retirement Planning Counselor Practice Test

CRPC - Chartered Retirement Planning Counselor Practice Test

CRPC Required Minimum Distributions and Beneficiary Planning 2