Experience and Benefits
After-Death Distribution Rules
As in the past, the surviving spouse may choose to rollover the IRA of the deceased spouse into his or her own name. In most cases this will be most advantageous, especially if the spouse is younger. The surviving spouse would then treat the IRA as their own, and if over 701/2, would then use the uniform distribution period table for minimum distributions based on their own age.
For non-spouse beneficiaries, beginning after the death of the IRA owner, the distribution period is generally the remaining single life expectancy of the designated beneficiary. The beneficiary's remaining life expectancy is calculated using the age of the beneficiary in the year following the year of the IRA owner’s death, reduced by one for each subsequent year. If there is no designated beneficiary as of the end of the year after the IRA owner’s death, the distribution period is the IRA owner’s life expectancy calculated in the year of death, reduced by one for each subsequent year.
Using Trusts as Beneficiaries. Although a trust may not be a "designated beneficiary", it may serve as an intermediary for payments to the designated beneficiary so long as the trust meets certain requirements. If these requirements are satisfied, the trust beneficiaries will be treated as your designated beneficiaries. The four requirements are:
- The trust must be a valid trust under state law
- The trust must be irrevocable at death
- The beneficiaries of the trust must be identifiable
- A copy of the trust document must be provided to the plan by October 31 of the year following the year of the IRA owner’s death