The distribution rules required at the death of an IRA owner depend on several things:
1. Did the IRA owner die before or after the “required beginning date”?
2. Who is the beneficiary?
In order to carry out the wishes of the IRA owner,Guest Posting evaluating both practical and estate planning implications of various decisions during the IRA owner’s life is essential. Important choices occur when the IRA owner makes his beneficiary election and, if married, by the spouse after the death of the IRA owner.
If you do not know the rules as https://us-southeast-1.linodeobjects.com/how-to-invest-in-a-gold-ira/how-to-invest-in-a-gold-ira.html they pertain to your choices, you are shooting in the dark. The wrong decision can cost money and likely cause the distribution of your IRA to be different than you would want.
Let’s make sure you know the rules of the game.
The first element is the required beginning date. For traditional IRAs, SEPs, SIMPLEs, this is Aril 1st of the year after turning 70 1/2. This rule does not apply to Roth IRAs, which have rules of their own.
There are several broad categories of beneficiaries:
1. The spouse.
2. A non-spouse beneficiary.
3. No beneficiary.
Let’s take each of these beneficiary elections and see how distributions are treated, depending on whether the IRA owner dies before or after the required beginning date.
The Spouse as Beneficiary
If the spouse is the only beneficiary, he or she can make an election that has a bearing on when the distributions must begin. The election is to treat the owner’s IRA as if it were their own.
Heads up: This election choice is unavailable if a trust is the beneficiary of the IRA, even if the spouse is the only beneficiary of the trust. A rollover may circumvent this problem.
If the IRA owner dies before the required beginning date, the spouse is the only beneficiary and the election made, the required distributions don’t have to begin until the IRA owner would have turned 70 1/2. The spouse would probably elect to apply this rule if the IRA owner was younger.
If the spouse elects not to be treated as the owner, the required minimum distributions (RMD) start right away and are based on the remaining life expectancy of the spouse. When the spouse dies, the distributions continue using the remaining life expectancy of the spouse.