Mary has sufficient other assets and income and will not need the
required minimum distributions when she has to start taking them next year.
The Treasury Department just changed the tax rules so people can now invest IRA money in deferred income annuities without worrying about
required minimum distributions.
"You lose your participant identifier when participants leave the plan, but we know that once [participant balances are] in the IRAs [individual retirement accounts], they generally don't come out until the
required minimum distributions [RMDs]," said Jean Young, senior research analyst at Vanguard's Center for Retirement Research in Valley Forge, Pennsylvania, and a co-author of the paper.
A Roth IRA is not subject to
required minimum distributions (RMDs), income tax upon distribution, or income in respect of a decedent (IRD) upon receipt by beneficiaries after the IRA owner's death.
Taking the wrong
required minimum distributions and missing important dates for distributions are common errors individuals make, accountants say.
Their
required minimum distributions (RMDs) are taxed anyway, so a QCD may substitute for some other charitable contribution they would otherwise make.
If Jack dies in 2010 at age 80, the trust may receive
required minimum distributions from Jack's IRA for a term of 65 years, based on Mary's age in the year after the year of Jack's death.
A recent letter ruling illustrates how one taxpayer used a rollover to avoid a retirement plan's
required minimum distributions (RMDs).
The new proposed regulations make it much easier for IRA owners, their heirs, and plan administrators to understand and apply the rules for
required minimum distributions. They also add significant flexibility in the determination of a designated beneficiary for distributions after the IRA owner's death.
Current tax code mandates that a retiree who reaches the age of 701/2 must begin a schedule of
Required Minimum Distributions (RMDs) from a Qualified Retirement Plan (such as IRA and 401(k) plans).
Until recently, such longevity annuities were impractical for retirement accounts because
required minimum distributions (RMDs) typically start after age 70%.
This
required minimum distributions upon death of the "holder" of a deferred annuity contract.
