Tax Planning for Retirees

Minimum Distribution From Tax-Favored Retirement Plans

  • § 8.01 Overview of Required Minimum Distributions
  • —–[1] Required Beginning Date for Minimum Distributions (RBD)
  • —–[2] Minimum Distribution Requirements for Annuities
  • —–[3] Minimum Distribution Requirements for Non-Annuities
  • —–[4] Distributions Not Taken into Account
  • —–[5] Distribution Under a QDRO
  • —–[6] IRA Ownership Election by Surviving Spouse
  • —–[7] Aggregation of Tax-Favored Plans
  • —–[8] Division of Tax-Favored Plans
  • —–[9] Source of Funds for Distributions
  • —-[10] Suspension of Minimum Distribution for 2020
  • § 8.02 Required Beginning Date for Minimum Distributions (RBD)
  • § 8.03 Minimum Distribution Requirements for Annuities
  • —–[1] Minimum Distribution Requirements for Annuities in General
  • ———-[a] Meeting Minimum Distribution Requirements
  • ———-[b] Meeting Initial Minimum Distribution Requirement for Annuities
  • ———-[c] Annuity Beginning Too Late to Meet Initial Minimum Distribution Requirements
  • ———-[d] Annuity Starting before Required Beginning Date (RBD)
  • —–[2] Requirements Applicable to Fixed Term Annuities
  • ———-[a] Meeting Requirements Applicable to Fixed Term Annuities
  • ———-[b] If Spouse Is Sole Beneficiary
  • ———-[c] Payments Starting Before the Required Beginning Date (RBD)
  • ———-[d] Retiree Dies before the Required Beginning Date (RBD)
  • —–[3] Requirements Applicable to Lifetime Annuities
  • ———-[a] When Requirements Applicable to Lifetime Annuities Automatically Met
  • ———-[b] Payments to Younger Nonspouse Beneficiary
  • ———-[c] Minor or Disabled Child
  • ———-[d] Payments Guaranteed for Fixed Term Under a Lifetime Annuity
  • —–[4] Annuity Payments that Increase Over Time
  • ———-[a] Increases Allowed by Tax Law
  • ———-[b] Additional Exceptions for Purchased Annuities
  • ———-[c] Additional Exceptions for Certain Annuities Paid by a Defined Benefit Plan
  • ———-[d] Exceptions for Increased Annuity Payments to Beneficiaries
  • —–[5] Changing the Annuity Payment Period
  • —–[6] Insurance Company Annuity Purchased by Tax-Favored Plan
  • —–[7] Additional Rules for Annuities Under Defined Benefit Plans
  • ———-[a] Accrual of Additional Benefits
  • ———-[b] Retirement After Age 70 ½
  • ———-[c] Lump Sum Distribution in Lieu of Annuity
  • —–[8] Separate Shares for Two or More Beneficiaries
  • —–[9] SECURE Act Applicable to Annuities Purchased by Defined Contribution Plans
  • § 8.04 Minimum Distribution Requirements for Non-Annuities
  • —–[1] Required Non-Annuity Distributions to the Retiree
  • ———-[a] When Required Non-Annuity Distributions Must Commence
  • ———-[b] Distributions to Retiree Based on Adjusted Account Balance
  • —————[i] Determination of Adjusted Account Balance
  • —————[ii] Adjusted Account Balance for a Qualified Retirement Plan
  • —————[iii] Adjustment of Account Balance for Certain Subsequent Year Events
  • ———-[c] Computation of Retiree’s Required Minimum Distribution
  • —————[i] Formula to Compute Retiree’s Required Minimum Distribution
  • —————[ii] Liberal Non-Annuity Distribution Rule for Married Retiree
  • —————[iii] Treatment of Unvested Benefits
  • —–[2] Required Non-Annuity Distributions to Beneficiaries
  • ———-[a] Different Distribution Requirements Apply to Different Classes of Beneficiaries
  • —————[i] Different Classes of Beneficiaries Generally
  • —————[ii] Definition of Eligible Designated Beneficiary
  • ——————–[A] Identification of EDBs
  • ——————–[B] Disabled Individual
  • ——————–[C] Minor Child
  • ——————–[D] Chronically Ill Individual
  • ——————–[E] EDB Status Determined as of Date of Death of Retiree
  • —————[iii] Distributions to Ineligible Designated Beneficiaries (IDBs)
  • —————[iv] Distributions to Eligible Designated Beneficiaries (EDBs)
  • ——————–[A] Distributions When the Only Beneficiaries of a Plan Are EDBs
  • ——————–[B] Distributions When a Plan Has Both EDBs and IDBs
  • ——————–[C] Distributions to EDBs under the Ten-Year Rule
  • ——————–[D] Distributions to EDBs under the Life-Expectancy Rule
  • ——————–[E] The Life Expectancy of the Oldest EDB
  • —————[v] When Spouse Is the Sole Beneficiary (sole EDB)
  • ——————–[A] Choice of the Ten-Year Rule or the Life-Expectancy Rule
  • ——————–[B] Death in Calendar Year before Year Attaining Age 62
  • ——————–[C] Death in Calendar Year Attaining Age 62 or Subsequent Years
  • ——————–[D] Distributions Computed by Annually Redetermining Life Expectancy
  • ——————–[E] The Surviving Spouse’s IRA Ownership Option
  • ——————–[F] Spouse Dies before Minimum Distributions Required
  • ——————–[G] Qualifying the Surviving Spouse as the Sole Beneficiary
  • —————[vi] When Spouse Is Not the Sole Beneficiary
  • ——————–[A] Choice of the Method of Distribution
  • ——————–[B] Distributions Based on Life Expectancy in the First Distribution Year
  • —————[vii] Death of an Eligible Designated Beneficiary
  • —————[viii] Managing Distributions under the Ten-Year Rule
  • —————[ix] Special Rule for Beneficiary Rollover from Plan to Inherited IRA
  • ——————–[A] Rollover by Nonspouse Beneficiary from Qualified Plan to Inherited IRA
  • ——————–[B] Rollover by Surviving Spouse from Qualified Plan to an IRA
  • ——————–[C] Special Rule Allowing an EDB to Switch to the Life-Expectancy Rule
  • —————[x] Identifying Designated Beneficiaries
  • —————[xi] Treatment of Nondesignated Beneficiaries (NDBs)
  • ——————–[A] Identification of Nondesignated Beneficiaries (NDBs)
  • ——————–[B] Distributions to Nondesignated Beneficiaries (NDBs)
  • ————————-[I] Distributions to an NDB if the Retiree Dies on or after His RBD
  • ————————-[II] Distributions to an NDB if the Retiree Dies before His RBD
  • ——————–[C] The RBD after the SECURE Act
  • —————[xii] Transition Rules for Beneficiary Distributions under the SECURE Act
  • —————[xiii] Non-Annuity Distributions to Beneficiaries before the SECURE Act
  • ——————–[A] Determination of the Required Beginning Date (RBD)
  • ——————–[B] Death of the Participant on or after the Required Beginning Date (RBD)
  • ————————-[I] Distributions Are a Fraction of the Adjusted Account Balance
  • ————————-[II] Payment of Deceased Participant’s Unpaid Minimum Distribution
  • ————————-[III] No Designated Beneficiary
  • ————————-[IV] Spouse as Sole Designated Beneficiary
  • ————————-[V] Other Designated Beneficiaries
  • ——————–[C] Death of the Participant before the Required Beginning Date (RBD)
  • ——————–[D] Unchanged Treatment of Eligible Exempt Organization Plans
  • ———-[b] Use of Trusts to Provide for Beneficiaries
  • —————[i] Advantages of Using a Trust for Beneficiaries
  • —————[ii] Designated Beneficiary Exception for See-Through Trusts
  • —————[iii] Use of Conduit Trusts
  • —————[iv] Use of Accumulation Trusts with Identifiable Beneficiaries
  • —————[v] Use of Powers of Appointment
  • —————[vi] Trust with Non-Individual Beneficiary
  • —————[vii] Applicable Multi-Beneficiary Trust (AMBT)
  • —————[viii] Separate Accounts, Separate Trusts, and Subtrusts
  • —————[ix] Spray Trust as Beneficiary of a Tax-Favored Plan
  • —————[x] Identifying Trust Beneficiaries with an Interest in a Tax-Favored Plan
  • —————[xi] Payment by a Trust of the Estate’s Expenses, Creditors, and Taxes
  • —————[xii] Trusteed IRA as Alternative to Naming Trust as Beneficiary
  • —————[xiii] Taxation of Retirement Benefits to Trusts and Their Beneficiaries
  • ——————–[A] Trust Tax Accounting in General
  • ————————-[I] Simple Trusts, Complex Trusts, and Other Trusts
  • ————————-[II] Income for Trust Accounting Purposes
  • ————————-[III] Distributable Net Income (DNI)
  • ——————–[B] Taxation of Simple Trusts and Their Beneficiaries
  • ——————–[C] Taxation of Complex Trusts and their Beneficiaries
  • ————————-[I] Trust Deduction for Distributions to Beneficiaries
  • ————————-[II] Amount and Character of Distributions to Beneficiaries
  • ————————-[III] Treatment of Charitable Contributions Paid by Complex Trust
  • ————————-[IV] Treatment of Separate Shares as Separate Trusts
  • ——————–[D] Distributions within 65 Days after the End of a Taxable Year
  • ——————–[E] Transfer by a Trust of Beneficial Interest in an IRA or Other Plan
  • —————[xiv] Use of Charitable Remainder Trusts
  • ———-[c] Application of Existing Regulations Governing Non-Annuity Distributions
  • —–[3] Distributions in Excess of Required Minimum Distribution
  • —–[4] Annuity Starting After Date Minimum Distributions Required
  • ———-[a] General Treatment of Late-Starting Annuity
  • ———-[b] Qualified Longevity Annuity Contract (QLAC)
  • —————[i] Qualifying Longevity Annuity Contracts (QLACs) in General
  • ——————–[A] Purpose and Availability of QLACs
  • ——————–[B] Definition of a QLAC
  • ——————–[C] Advantages of a QLAC
  • ——————–[D] The Dollar and Percentage Limitations on QLAC Premiums
  • —————[ii] Surviving Spouse as Sole Beneficiary of a QLAC
  • —————[iii]  Surviving Spouse Not Sole Beneficiary of a QLAC
  • —————[iv] Coordination with Required Spousal Annuity Rules
  • —————[v] Separate Accounts for QLAC Beneficiaries
  • —————[vi] Planning with Rollovers and Roth Conversions
  • ——————–[A] Planning with Ordinary Rollovers
  • ——————–[B] Planning with Roth Conversions and Rollovers
  • —–[5] Valuation of Illiquid Investments
  • § 8.05 Problematic Distributions/Transfers for Minimum Distribution Purposes
  • —–[1] Trustee-to-Trustee Transfers
  • —–[2] Indirect Rollovers
  • ———-[a] Problematic Indirect Rollovers Generally
  • ———-[b] Rollovers Only after Minimum Distributions Met
  • ———-[c] Rollovers to a Recipient Plan in a Year after the Distribution
  • —–[3] Other Distributions
  • § 8.06 Aggregation or Division of Qualified Retirement Plans, IRAs or Roth IRAs
  • —–[1] Minimum Distributions Must Generally Be Determined Separately
  • —–[2] Meaning of Separate Accounts
  • —–[3] Advantages of Separate Accounts for Beneficiaries
  • —–[4] Divisions of Plan Accounts and Inherited IRAs Held by Trusts
  • —–[5] Separate Accounts Not Available for Tax-Favored Plan with Estate as Beneficiary
  • § 8.07 Source of Funds Used to Make Minimum Distributions
  • § 8.08 Effect of QDROs on Minimum Distributions
  • —–[1] QDROs and Minimum Distributions Generally
  • —–[2] Payment Delays Due to QDRO Determinations or Insurance Company Insolvency
  • § 8.09 Minimum Distributions if Surviving Spouse Elects Ownership of IRA or Roth IRA
  • —–[1] Requirements and Consequences of a Spousal Ownership Election
  • —–[2] Using the Ownership Election to Defer Income Taxes
  • —–[3] Spousal Ownership of Roth IRAs
  • —–[4] Alternative Where IRA (or Roth IRA) Ownership Election Not Available
  • —–[5] Alternative for Funds Rolled Over from Employer Plans to IRAs
  • § 8.10 Effect of Disclaimers on Required Minimum Distributions
  • —–[1] Qualified Disclaimers of Interests in Tax-Favored Plans
  • —–[2] Using Qualified Disclaimers to Plan Minimum Distributions
  • § 8.11 Suspension of Minimum Distribution Requirements for 2020

» Chapter 9 – UNFUNDED NONQUALIFIED EMPLOYER PLANS