The beneficiary or beneficiaries as identified on the “determination date” (September 30 of the year following the year of death) will determine the amount that must be distributed to satisfy the RMD requirements.
Generally, the listed beneficiaries will likely be the same individuals as those listed as beneficiary at the time of the participant’s death. However, a beneficiary may wish to disclaim all or a portion of the account for estate planning purposes or for other reasons. It is also possible that a beneficiary listed at the time of death may wish to take his or her portion as a lump sum distribution prior to the determination date.
In addition, participants may name a charity as one of the beneficiaries without affecting the ability of other named beneficiaries to take distributions over their respective life expectancies. The lump sum due to the charity must be made before September 30 of the year following the year of the participant’s death. Then each remaining named beneficiary may satisfy the first life expectancy distribution by December 31.
Editor’s Note: This is an occasional feature in the NTSA Advisor. It is drawn from The Source, a book that covers technical, compliance, administrative and marketing aspects of the 403(b) and 457(b) markets. More information about The Source is available here.
- Log in to post comments