3786. How is the designated beneficiary determined for purposes of the minimum distribution requirements?Nuco Employeercline202014-08-17T14:34:00Z2014-08-17T14:34:00Z38204676Summit Business Media3810548614Site Map/Retirement Plans/Pension And Profit Sharing/Qualification/Distribution/RequiredSite Map/Retirement Plans/Quick Clicks/Required Minimum Distributions required minimum distributions RMD MRD trust beneficiary2005-01-25T00:00:00ZTaxFactsDefaultArticle116070345-00-tf1.xml347.00;#2259;#2284;#0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900242457EFB8B24247815D688C526CD44D009C4E67E972694125ABDA91AC61F5E51FTax Facts 1How is the “designated beneficiary” determined for purposes of the minimum distribution requirements? What are the separate account rules?94200.0000000000TaxFactsDefaultArticleSBMEDIA\moss-admin2010-01-15T00:10:43Z3786. How is the designated beneficiary determined for purposes of the minimum distribution requirements? A designated beneficiary means any individual designated as a beneficiary by the employee.IRC Sec. 401(a)(9)(E). An individual may be designated as a beneficiary under a plan either by the terms of the plan or, if the plan so provides, by an affirmative election by the employee (or the employee’s surviving spouse) specifying the beneficiary.Treas. Reg. §1.401(a)(9)-4, A-1. The fact that an employee’s interest under a plan passes to a certain individual under applicable state law, however, does not make that individual a designated beneficiary unless the individual is designated as a beneficiary under the plan.Treas. Reg. §1.401(a)(9)-4, A-1. See e.g. Kennedy v. Plan Adm'r for DuPont Sav. & Inv. Plan, 555 U.S. 285 (2009). For details on the ability of a non-spouse designated beneficiary to rollover funds from a qualified plan account to an inherited IRA, see Q 3866.A beneficiary designated under a plan is an individual (or certain trusts (see below)) who is entitled to a portion of an employee’s benefit, contingent on the employee’s death or another specified event. A designated beneficiary need not be specified by name in the plan or by the employee to the plan to be a designated beneficiary so long as the individual who is to be the beneficiary is identifiable under the plan as of the date the beneficiary is determined. Planning Point: To be a QDRO, the beneficiary should be named or otherwise be clearly identified.The choice of beneficiary is subject to the IRC’s provisions for joint and survivor annuities, QDROs, and consent requirements (Q 3769, Q 3777, Q 3793).Treas. Reg. §1.401(a)(9)-4, A-2. For an explanation of the effect of a QDRO on the minimum distribution requirements, see Q 3789. To be a designated beneficiary for purposes of minimum distributions, an individual must be a beneficiary on the date of the employee’s death. The determination of the existence and identity of a designated beneficiary for purposes of minimum distributions is made on September 30 of the calendar year following the year of the employee’s death.Treas. Reg. §1.401(a)(9)-4, A-4(a). Exceptions may apply if the account is payable as an annuity, or if a surviving spouse beneficiary dies after the employee but before distributions have begun. This is so a distribution may be calculated and made by the deadline of December 31 following the year of the employee’s death.Consequently, an individual who was a beneficiary as of the date of the employee’s death, but 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 employee’s death.Treas. Reg. §1.401(a)(9)-4, A-4(a). A disclaiming beneficiary’s receipt (prior to disclaiming the benefit) of a required distribution in the year after death will not result in the beneficiary being treated as a designated beneficiary for subsequent years.Rev. Rul. 2005-36, 2005-26 IRB 1368; Let. Rul. 201125009; Let. Rul. 201245004.An entity other than an individual or a trust meeting certain requirements (see Q 3788) cannot be a designated beneficiary for required minimum distribution purposes. Thus, for example, an employee’s estate cannot be a designated beneficiary.Treas. Reg. §1.401(a)(9)-4, A-3.Multiple BeneficiariesIf more than one beneficiary is designated with respect to an employee as of the date on which the designated beneficiary is to be determined, the designated beneficiary with the shortest life expectancy is the measuring life for purposes of determining the distribution period.Treas. Reg. §1.401(a)(9)-5, A-7(a)(1). Special rules, explained in Q3787, apply if the employee’s benefit is divided into separate accounts, or segregated shares, and the beneficiaries of each account differ. If an employee has designated multiple beneficiaries, and as of the date on which the designated beneficiary is to be determined, one of the beneficiaries is an entity (such as a trust not meeting applicable requirements or a charitable organization), the employee will be treated as having no beneficiaries.Treas. Reg. §1.401(a)(9)-4, A-3.Contingent and Successor BeneficiariesIf a beneficiary’s entitlement to an employee’s benefit is contingent on an event other than the employee’s death or the death of another beneficiary, the contingent beneficiary will be considered a designated beneficiary for purposes of determining the designated beneficiary who has the shortest life expectancy.Treas. Reg. §1.401(a)(9)-5, A-7(b). The fact that the contingency may be extremely remote (e.g., two children predeceasing a sixty-seven-year-old relative) does not appear to affect this outcome.See Let. Rul. 200228025. In contrast, if a “successor beneficiary’s” entitlement is contingent on the death of another beneficiary, the successor beneficiary’s life expectancy cannot be counted for purposes of determining the designated beneficiary who has the shortest life expectancy unless the other beneficiary dies prior to the date on which the beneficiary is determined.Treas. Reg. §1.401(a)(9)-5, A-7(c)(1).