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        RISELING REPORT . . . . . . . . .

                                                                       FEBRUARY 2001

       The Internal Revenue Service (“IRS”) recently issued NEW proposed
Regulations on Individual Retirement Account (IRA) Required Minimum Distributions
(“RMDs”. These new Regulations (when adopted) will replace present proposed
Regulations which have been in place since 1987. Although these new Regulations
have not been finally adopted, they may be relied upon right now! All existing IRA
instruction manuals (including our “IRA Owners Manual”) are now obsolete! About all
that remains the same are some definitions and basic operating rules regarding Trusts
as beneficiaries of IRA’s. Even IRS Publication 590 (the 2000 edition) is obsolete. Our
preliminary analysis is that all of the changes are good with one or two minor
exceptions. We will keep you posted as we continue our detailed analysis of the new
proposed Regulations.

                                         KEY WORDS

      There are several terms which you need to understand.

       DESIGNATED BENEFICIARY: This is the person who, for tax purposes, will
receive the IRA when the IRA Owner dies. This term is only relevant to retirement
accounts. It is not the same as the simple concept of “beneficiary”. Only INDIVIDUALS
can be a Designated Beneficiary. A Trust cannot be a Designated Beneficiary, but the
beneficiaries pursuant to a properly drafted Trust Agreement can be Designated
Beneficiaries of an IRA. A Designated Beneficiary has absolutely no impact upon the
calculation of an IRA Owner’s RMD except where a spouse is the Sole Designated
Beneficiary and is more than ten (10) years younger than the IRA Owner. A Designated
Beneficiary can be finally determined as late as the end of the year following the year of
the IRA Owner’s death. This will allow for sophisticated beneficiary designations
involving the use of disclaimers!

      REQUIRED MINIMUM DISTRIBUTION (RMD):                 This is the distribution which
an IRA Owner is required to take commencing at age seventy (70) (the first distribution
must be taken no later than April 1 of the year following the year the IRA Owner attains
age 70½).

       UNIFORM DISTRIBUTION PERIOD:            This is the period over which RMD’s
must be withdrawn. This period is generally determined by using a simple Uniform
Table that applies to all IRA Owners with one (1) exception. If an IRA Owner’s spouse

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is the sole beneficiary and if that spouse is more than ten (10) years younger, a different
distribution period (longer) may be used! Upon an IRA Owner’s death, the Uniform
Distribution Period for a Designated Beneficiary is generally the Designated
Beneficiary’s life expectancy. If there is no Designated Beneficiary (i.e. the IRA Owner
made a “mistake” and named no one or his estate etc. as beneficiary), the Uniform
Distribution Period is the remaining life expectancy of the deceased IRA Owner!

                                HOW THE NEW RULES WORK

       1. When an IRA Owner becomes subject to RMD, the RMD is calculated by
          dividing the IRA balance on the preceding December 31st by the
          distribution period. Remember, the distribution period is taken from the
          Uniform Table unless the spouse is sole beneficiary and more than ten
          (10) years younger.

       2. The identity of the Designated Beneficiary (unless a spouse who is more
          than ten (10) years younger) does not impact the RMD calculation
          while the IRS Owner is living. Designated Beneficiaries can be changed
          at any time without changing the RMD calculation!

       3. After an IRA Owner’s death, the Designated Beneficiary can withdraw the
          IRA balance over the Designated Beneficiary’s remaining lifetime. (The
          five (5) year option is still available).

       4. A surviving spouse is still permitted to “roll-over” an inherited IRA. Under
          the previous Regulations a “deemed” IRA roll-over was permitted under
          certain circumstances (e.g., the sole beneficiary of the Trust was the
          Grantor’s surviving spouse). Under the new proposed Regulations a
          “deemed” IRA roll-over is not permitted if the beneficiary of the IRA is a
          Trust – even if the surviving spouse is the sole beneficiary of that Trust
          and is entitled to withdraw all funds from the Trust. In other words, if a
          spouse is going to roll-over an “IRA” that spouse must be the named
          beneficiary. More on this later as we develop insight.

                                   WHAT TO DO NOW

       Taxpayers are entitled to rely upon the new proposed regulations right now. This
means that all RMDs can be re-calculated using the new favorable tables. We
recommend that all clients review their RMDs under the new tables. For your
convenience, the general Uniform Table is reproduced below. Since the Table is so
simple, I am sure that software programs will become readily available to calculate RMD’s
(or you could even write your own). Note that under these Tables, an individual at age 91
is only required to withdraw about 10% of the IRA balance; at age 114 50% must be
withdrawn in that year.

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      If you have any questions about the new regulations, please feel free to contact Jeff
Rhodes or Ted Riseling. We are in the process of a detailed analysis of these regulations
and should have more information for you in the next few months.

                       GENERAL RULE UNIFORM TABLE
  Employees Age        Distribution Period     Employees Age       Distribution Period
       70                      26.2                 93                     8.8
       71                      25.3                 94                     8.3
       72                      24.4                 95                     7.8
       73                      23.5                 96                     7.3
       74                      22.7                 97                     6.9
       75                      21.8                 98                     6.5
       76                      20.9                 99                     6.1
       77                      20.1                 100                    5.7
       78                      19.2                 101                    5.3
       79                      18.4                 102                    5.0
       80                      17.6                 103                    4.7
       81                      16.8                 104                    4.4
       82                      16.0                 105                    4.1
       83                      15.3                 106                    3.8
       84                      14.5                 107                    3.6
       85                      13.8                 108                    3.3
       86                      13.1                 109                    3.1
       87                      12.4                 110                    2.8
       88                      11.8                 111                    2.6
       89                      11.1                 112                    2.4
       90                      10.5                 113                    2.2
       91                       9.9                 114                    2.0
       92                       9.4                 115                    1.8


                               RISELING & RHODES, P.C.

                                     Ted M. Riseling
                                     Jeff K. Rhodes

2510 E. 21st St.                                                    Bartlesville, OK
Inverness Park                                                             and
Tulsa, OK 74114                                                   Toll-free Nationwide
(918) 747-0111                                                      (866) 747-0111

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