Quick Reference: Beneficiary Options for  Traditional IRA

Beneficiary

IRA owner Dies Before the RBD

IRA owner Dies on or After the RBD

Spouse beneficiary

  • •§  Transfer or rollover to own traditional IRA
  • •§  Rollover to own qualified plan, 403(b), 403(a) or 457(b) account,
  • •§  Life-expectancy Payments (Recalculation): The assets are distributed over the single-life-expectancy of the surviving spouse, beginning the later of :
  • •(a)   12/31 of the year following the year the IRA owner dies or
  • •(b)   12/31 of the year the IRA owner would have reached age 70 ½, had he lived,  or
  • •§  Five Year Option: The assets must be fully distributed by December 31 of the 5th year following the year the IRA owner dies.
  • •§  Transfer or rollover to own traditional IRA
  • •§  Rollover to own qualified plan, 403(b), 403(a) or 457(b) account,
  • or
  • •§  Life expectancy Payments: Beginning 12/31 of the year following the year the IRA owner dies.  The assets are distributed over the longer of :
  • •o    The remaining life expectancy of the deceased IRA owner ( Non-recalculated) or
  • •o    The life-expectancy of the surviving spouse (Recalculated).

Non-spouse beneficiary

  • •§  Life-expectancy Payments (Non-Recalculation): Distributions must begin by 12/31 of the year following the year the IRA owner dies or
  • •§  The Five-Year Option: The assets must be fully distributed by December 31 of the 5th year following the year the IRA owner dies.
  • •§  Life expectancy Payments: Beginning 12/31 of the year following the year the IRA owner dies. The assets are distributed over the longer of
  • •(a)   The remaining life expectancy of the deceased IRA owner(Non-recalculated) or
  • •(b)   The life-expectancy of the beneficiary (Non-recalculated).

Non-person beneficiary :example- an estate, charity, nonqualified trust

  • •§  The Five-Year Option: The assets must be fully distributed by December 31 of the 5th year following the year the IRA owner dies.
  • •§  Life-expectancy Payments: Over the remaining life-expectancy of the deceased IRA owner (Non-recalculated), beginning by 12/31 of the year following the year the IRA owner dies.

Qualified trust beneficiary

  • •§  Life-expectancy Payments:
  •       I.        If the surviving spouse is the sole beneficiary of the trust, the assets are distributed over the single life expectancy of the surviving spouse beneficiary (Recalculated), beginning the later of :
  • •(a)   12/31 of the year following the year the IRA owner dies or
  • •(b)   12/31 of the year the IRA owner would have reached age 70½.

If the surviving spouse is not the sole primary beneficiary of the trust, distributions are based on the oldest beneficiary’s life expectancy (Non-recalculated), and must begin by 12/31 of the year following the year the IRA owner dies,   or

  •     II.        The Five-Year Option: The assets must be fully distributed by December 31 of the 5th year following the year the IRA owner dies.
  • •§  Life-expectancy Payments:
  •               I.        If the surviving spouse is the sole beneficiary of the trust, the assets are distributed over the longer of :
  • •(a)   The life expectancy of the deceased IRA owner (Non-recalculated) or
  • •(b)   The life-expectancy of the surviving spouse (Recalculated).
  •             II.        If the surviving spouse is not the sole primary beneficiary of the trust, the assets are distributed over the longer of the Non-recalculated life expectancy of :
  • •(a)   The deceased IRA owner or
  • •(b)   The oldest beneficiary of the trust.

For either option, distributions must begin by 12/31 of the year following the year the IRA owner dies.

Notes:

  • •§  If the life expectancy option applies, and there are multiple beneficiaries, the life expectancy of the oldest beneficiary is used, unless the assets are split into separate accounts by 12/31 of the year following the year the IRA owner dies. Beneficiaries whose share is split into separate accounts may use their own life expectancies.
  • •§  When the decedent’s life expectancy is used, it is determined in the year of death. When the non-spouse beneficiary’s life-expectancy is used, it is determined in the year following the year the IRA owner dies.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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