This is true even in the year of the death of an account owner who has reached his or her required beginning date
(i.e., who is over 70 1/2 and was taking lifetime RMDs).
If death occurs after the age 70 1/2 required beginning date
and there is no designated beneficiary, then beneficiaries may do a bit better, but not much.
For purposes of the minimum distribution rules explained in Q 342 to Q 348, and the minimum distribution incidental benefit rule explained in Q 349, the term "required beginning date
" means April 1 of the calendar year following the later of (a) the year in which the employee attains age 70/, or (b) the year in which the employee (other than a 5% owner) retires from the employer maintaining the plan.
Distributions are again determined by whether the IRA owner dies before the required beginning date
Distributions to a designated beneficiary (see definition on page 412) are determined by whether the IRA owner dies before the required beginning date
Required beginning date
(RBD) begins the following April.
Since Janice had not yet reached her required beginning date
(RBD), prior to her death (generally, age 70 1/2), Marion could take minimum distributions over her own life expectancy.
designated beneficiary: An individual (or a trust meeting special requirements) that is named as beneficiary of an IRA or qualified plan benefit prior to the required beginning date
(20) This is referred to as the individual's required beginning date
For traditional IRAs, if the IRA owner dies before beginning distributions (i.e., the required beginning date
), there are two basic alternatives.
Individual and employee plans are subject to a 10 percent penalty, tax if you take money prior to retirement, and once you reach your required beginning date
(usually April 1 of the year in which you reach 70 1/2), you must take annual minimum distributions in order to avoid a 50 percent penalty tax.
Rather than being required to begin taking distributions shortly after your death (which is what a non-spouse beneficiary would have to do), your surviving spouse can delay the start of distributions until April 1st of the year after your spouse reaches the age of 70 (referred to as the required beginning date
, or "RBD").