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CCH® PENSION AND BENEFITS — 12/6/06

Descendant's life expectancy not used to determine minimum required IRA distribution

The life expectancy of a surviving spouse's son could not be used to determine the Code Sec. 401(a)(9) minimum required distributions from an individual retirement account (IRA) for years subsequent to the year of his mother's death, the IRS has privately ruled.

An individual opened an IRA and then died before reaching the age of 70½. He was survived by his wife, who was treated as the IRA beneficiary. The associated trust provided that, upon the wife's death, remaining amounts in the IRA were to be paid to her living and lineal descendants. The wife began receiving distributions from the IRA, but died prior to reaching the age of 70½. She was survived by her son, but had not named a beneficiary of her interest in the IRA before her death. Consequently, the son's interest in the IRA was limited to amounts that remained in the account at the wife's death, and his rights were those of a "successor beneficiary," according to the IRS. His life expectancy did not have to be considered when determining future minimum required distributions. The IRS has stated that, under Reg. §1.401(a)(9)-4 , because there was no designated beneficiary for the IRA participant's surviving spouse, the 5-year rule of Code Sec. 401(a)(9)(B)(ii) should be applied as though the wife were the IRA participant.

For more information on this and related topics, consult the CCH Pension Plan Guide.

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