IRA RMD Calculation -

[Guest AJ Milano]

An IRA holder is in payout status, and the primary beneficiary on the account is his wife, who is 10 years younger than him. His wife dies in 2002, and he names his daughter primary beneficiary. When calculating his 2002 IRA RMD, am I correct to use his daughters age when doing the calculation? By doing this, his RMD will be greater.

Or, am I required to leave the calculation based upon his deceased wife’s age? Thanks for any guidance on this. Sincerely, Anthony Milano

[Mary Kay Foss]

The final regulations make some of these questions easier to deal with than they used to be.

IRA owners use the uniform table to calculate distributions during their lifetime. The identity of the beneficiary is not relevant for the calculations.

When the sole beneficiary is a spouse who is more than 10 years younger, the Joint and Last Survivor table is used. Marital status for using this table is determined as of the 1st day of the year. Thus if a younger spouse passed away in 2002, her life could still be used for the 2002 distribution.

[mbozek]

I thought that under the 2002 final regs all payments under the MRD rules are made on a two life basis assuming that the beneficary is 10 years younger than the retiree. The only exception is where the spouse is more than 10 years younger than the retiree in which case the MRD is based on IRS tables for the actual ages of the retiree and spouse. In the above post the spouse was 10 years younger than the retiree. Therefore the MRD for daughter will be the same amount as the payment when the spouse was alive because both beneficaries are assumed to be 10 years younger than the retiree. .

[Guest AJ Milano]

Mary:

I agreew with you statement of "When the sole beneficiary is a spouse who is more than 10 years younger, the Joint and Last Survivor table is used. Marital status for using this table is determined as of the 1st day of the year. Thus if a younger spouse passed away in 2002, her life could still be used for the 2002 distribution." Could you point me in the right direction of the regulation that states this, so I can show my client?

Regards, Anthony J. Milano

[Mary Kay Foss]

Check the regulations under 1.401(a)(9)-5, Q&A 4(B)(2). The section is titled - Change in marital status.

[Appleby]

mbozek

Mary Kay is right

Under the new proposed, as well as the final RMD regs, when calculating the RMD amount, one always use the uniform life table, which assumes the beneficiary to be ten years younger than the participant. There is one exception to this to this rule, i.e. when the participant has a spouse beneficiary more than ten years his/her junior. In this case, the joint tables are used.

… the beneficiary is determine as of the first day of the year. Any change made during the, including as a result of death or divorce, does not affect the calculation of the RMD amounts.

[mbozek]

A: I dont know what you mean "by Mary Kay is right". My response was that the MRD to the retiree after the spouse's death would be the same regardless of who the beneficary is in this case because the spouse was 10 yrs younger than the retiree. Thus the uniform table are used. The same table will be used if the daughter is the beneficiary. I thought that the uniform table assumes that the payments are made over the life of the retiree and a beneficary who is 10 yrs younger than the retiree. The J & S table is used only if the spouse is more than 10 yrs younger than the retiree.

[Appleby]

mbozek

You are right-