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Old 12-20-2011, 11:43 AM
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What happens to an Inherited Account when the Owner Dies prior to their Required Beginning Date (RBD) and the beneficiary is other than a Spouse?

The IRS has established different rules when a beneficiary is other than a spouse as far as Required Beginning Date. Thus, for beneficiaries other than a Spouse, the earliest required distributions begin in the calendar year following the year of the employee’s death.

1. In the event the designated beneficiary is an individual (such as the participant’s child), RMD will be based on the beneficiary’s life expectancy.

2. A qualifying trust may take RMD over a period not longer than the life expectancy of the oldest beneficiary.

3. If there is no designated beneficiary, the entire account must be distributed by the end of the fifth year (known as the five-year rule) following the year of the employee’s death.

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