3645. Who is a “designated beneficiary” for purposes of required minimum distributions from an IRA?Nuco Employeercline202015-06-05T17:42:00Z2015-06-05T17:42:00Z37284154Albany Law School349487314Site Map/Individual Retirement Plans/Roth IRA/Distributions/Minimum Required DistributionsSite Map/Individual Retirement Plans/Traditional IRA/Distributions/Minimum Required Distributionsrequired minimum distributions RMD MRD2005-01-19T00:00:00ZTaxFactsDefaultArticleSite Map/Individual Retirement Plans/Quick Clicks/Required Minimum Distributions114890236-00-tf1.xml237.00;#1814;#1823;#1800;#0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900242457EFB8B24247815D688C526CD44D009C4E67E972694125ABDA91AC61F5E51FTax Facts 1Who is a “designated beneficiary” for purposes of required minimum distributions from an IRA? What are the rules for multiple beneficiaries and separate accounts?91400.0000000000TaxFactsDefaultArticleSBMEDIA\moss-admin2010-01-15T00:06:29Z0f08e536-ecc3-4201-b7c3-d3285df31d4d|91ed7e4f-6b8e-481d-94fc-4cbced323dc3|856d3c9f-5c55-401c-9570-a443480f06fb3645. Who is a “designated beneficiary” for purposes of required minimum distributions from an IRA? A designated beneficiary is an individual (or a trust meeting certain requirements, see Q 3809) designated as a beneficiary, either by the terms of the IRA plan document or by an affirmative election of the IRA owner(or such owner’s surviving spouse)..Treas. Reg. §1.401(a)(9)-4, A-1. The designated beneficiary need not be specified by name to be a designated beneficiary so long as he or she is identifiable under the terms of the IRA as of the determination date..Treas. Reg. §1.401(a)(9)-4, A-1. For special rules governing contingent and successor beneficiaries, see Q 3809.For lifetime distributions, the identity and age of the designated beneficiary does not affect the IRA owner’s distributions unless the sole designated beneficiary is a spouse more than ten years younger than the owner (Q 3637). For purposes of after-death minimum distribution requirements, the final regulations require that a beneficiary determination be made as of September 30 of the year after the year of the IRA owner’s death (i.e., the determination date)..Treas. Reg. §1.401(a)(9)-4, A-4(a). This date is designed to provide ample time following the determination of the designated beneficiary(ies) to calculate and make the required distribution prior to the distribution deadline (i.e., the end of the calendar year following the owner’s death)..Treas. Reg. §1.401(a)(9)-3, A-3(a). Exceptions to the September 30 deadline may apply if the account is payable as an annuity, or if a surviving spouse beneficiary dies after the IRA owner but before distributions have begun. Consequently, an individual who was a beneficiary as of the date of the owner’s death, but who is not a beneficiary as of September 30 of the following year (e.g., because the individual disclaims entitlement to the benefit or because the individual receives the entire benefit to which he or she is entitled before that date) is not taken into account for purposes of determining the distribution period for required minimum distributions after the owner’s death..Treas. Reg. §1.401(a)(9)-4, A-4(a).A disclaiming beneficiary’s receipt of a required distribution, prior to disclaiming the benefit, in the year after death will not result in the beneficiary being treated as a designated beneficiary for subsequent years..Rev. Rul. 2005-36, 2005-1 CB 1368. In a private letter ruling, the IRS also determined that a post-death reformation of a beneficiary designation form that had inadvertently excluded a decedent’s children was effective to create a “designated beneficiary.”.Let. Rul. 200616039. The children had been omitted as contingent beneficiaries on their father’s beneficiary designation due to a mistake by a bank employee, and not due to their fault. The children were therefore allowed to set up inherited IRAs after their father’s death. If a beneficiary is not an individual or a permitted trust, the IRA owner will be treated as having no designated beneficiary and the 5 year rule will apply (Q 3639). An IRA owner’s estate may not be a designated beneficiary..Treas. Reg. §1.401(a)(9)-4, A-3.As a general rule, only an individual (not an estate or a trust) may be a designated beneficiary for required minimum distribution purposes. For example, if an IRA owner fails to name a beneficiary on the beneficiary designation form and the IRA plan document provides that in such a case benefits are paid to the owner’s estate, the estate beneficiaries will be barred from using the life expectancy method and the five year rule will apply. Treas. Reg. §1.401(a)(9)-4, A-3. However, when a trust is named as a beneficiary and the special requirements for a “see-through” trust are met (Q 3809), the beneficiaries of a trust may be treated as if they had been designated as the beneficiaries of the IRA for required minimum distribution purposes (but not for purposes of “separate account treatment,” see Q 3646). In general, a valid see-through trust must satisfy the following four requirements: (1) the trust must be valid under state law, (2) the trust must be irrevocable, or must become irrevocable upon the death of the original account owner, (3) the beneficiaries of the trust who are to be beneficiaries of the IRA must be identifiable from the trust instrument itself, and (4) relevant documentation must have been provided to the plan administrator in a timely manner. Treas. Reg. §1.401(a)(9)-4, A-5. In this case, the life expectancy of the oldest of all trust beneficiaries will be used to determine the minimum distribution requirements that apply after the death of the original account owner. Treas. Reg. §1.401(a)(9)-5, A-7.