Pro - IRA and Retirement New Regs
Some highlights are as follows:No. 1 No more recalc/non-recalc elections. You no longer have a choice of distribution method. The MDIB table applies to all distributions except for a spouse who is more than 10 years younger.
No. 2 You can keep changing your beneficiary after the RBD and it will never cause your IRA to be paid out faster. But if you marry someone more than 10 years younger, it will slow the pace of distributions.
No. 3 Your designated beneficiary will be determined on December 31 of the year following the year of your death. This allows post mortem "stetch-out"planning.
No. 4 I have not yet given the regs a careful reading but there is an apparaent contradiction between the following provisions: "If there is no designated beneficiary as of the end of the year after the employee's death, the distribution period is the employee's life expectancy calculated in the year of death, reduced by one for each subsequent year." and: "The 5-year rule would apply automatically only if the employee did not have a designated beneficiary as of the end of the year following the year of the employee's death." In either case, the problem of immediate distribution within 1 year of death is gone.
No. 5 When a trust is named as beneficiary the deadline for providing the beneficiary documentation to the plan administrator would be the end of the year following year of the employee's death.
No. 6 If, as of the end of the year following the year of the employee's death, the employee has more than one designated beneficiary and the account or benefit has not been divided into separate accounts or shares for each beneficiary, the beneficiary with the shortest life expectancy is the designated beneficiary. So instead of breaking up the IRA's, one for each beneficiary and trying to keep the balances the same, we can now reduce administration by having multiple beneficiaries of a single IRA. Each DB can use his own life expectancy as long as the IRA is separated by Dec 31st of the year following the date of death.
No 7 To insure compliance the plan custodian must report the required minimum distribution to the IRS.
No 8 The 50% penalty still applies. The rules are simplified, but now if you don't take your required minimum distribution the IRS will know about it.
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