3787. What are the separate account rules for purposes of the minimum distribution requirements?Nuco Employeercline202014-08-17T14:35:00Z2014-08-17T14:35:00Z34192390Summit Business Media195280414Site 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-admin2010-01-15T00:10:43Z3787. What are the separate account rules for purposes of the minimum distribution requirements?If an employee’s benefit is divided into separate accounts under a defined contribution plan (or in the case of a defined benefit plan, into segregated shares) and the separate accounts have different beneficiaries, the accounts do not have to be aggregated for purposes of determining the required minimum distributions for years subsequent to the calendar year in which they were established (or date of death, if later).Treas. Reg. §1.401(a)(9)-8, A-2(a)(2). Separate account treatment is permitted for the year following the year of death, provided the separate accounts are actually established by the end of the calendar year following death.For purposes of Section 401(a)(9), separate accounts are portions of an employee’s benefit representing the separate interests of the employee’s beneficiaries under the plan as of the employee’s date of death. The separate accounting must allocate all post-death investment gains and losses, contributions, and forfeitures for the period prior to the establishment of the separate accounts on a pro rata basis in a reasonable and consistent manner among the accounts. Once separate accounts actually are established, the separate accounting can provide for separate investments in each account, with gains and losses attributable to such investments allocable only to that account. A separate accounting also must allocate any post-death distribution to the separate account of the beneficiary receiving it.Treas. Reg. §1.401(a)(9)-8, A-3.The applicable distribution period is determined for each separate account disregarding the other beneficiaries (i.e., allowing each beneficiary to use his or her own life expectancy) only if the separate account is established no later than December 31 of the year following the decedent’s death.Treas. Reg. §1.401(a)(9)-8, A-2(a)(2).If a trust is the beneficiary of an employee’s plan interest, separate account treatment is not available to the beneficiaries of the trust.Treas. Reg. §1.401(a)(9)-4, A-5(c). The IRS has determined repeatedly that the establishment of separate shares did not entitle multiple beneficiaries of the same trust to use their own life expectancies as the distribution period.See, e.g., Let. Ruls. 200307095, 200444033, 200528031. The IRS has privately ruled that where separate individual trusts were named as beneficiaries, the ability of each beneficiary to use his or her life expectancy was preserved even though the trusts were governed by a single “master trust.”See Let. Rul. 200537044.If the December 31 deadline is missed, or if the plan beneficiary is a trust with multiple beneficiaries, separate accounts still may be established (e.g., for administrative convenience); however, the applicable distribution period will be the shortest life expectancy of the various beneficiaries.Treas. Reg. §1.401(a)(9)-8, A-2(a)(2). The fact that the trust meets the requirements for a “see-through trust” does not change this result.See Let. Rul. 200317044.