Beneficiary Options - Distributions

General Rules for Taking Beneficiary Distributions
Understanding beneficiary options and distribution requirements is vital to designing an estate plan that will fit your wealth distribution needs.

As the beneficiary of a retirement plan, knowing that IRA assets can continue to grow tax-deferred would be valuable information. This growth is achieved by leaving assets in the original account or transferring them to an inherited IRA registered in the name of the decedent for your benefit.

While all inherited retirement accounts are subject to Required Minimum Distribution (RMD) rules, careful planning can help maximize the potential for long-term growth.

The timeframe for making decisions depends on a variety of factors. Should an heir receive a beneficiary distribution, these would include:

  • The relationship to the account owner
  • The type of account
  • Plans for the assets. 
The following guides can help you make those plans and meet the IRS deadlines.
  1. Beneficiary Distribution Table - Before Required Beginning Date (RBD)
  2. Beneficiary Distribution Table - After RBD
To help you better understand the ins and outs of beneficiary distributions, we have compiled a short glossary that covers:
  • Five Year Rule (page jumps)
  • Life Expectancy
  • Life Expectancy Tables
  • Non-individual beneficiary
  • Qualified Disclaimer
  • Required Minimum Distribution (RMD)
Five Year Rule
The entire account must be distributed by 12/31 of the year that contains the fifth anniversary of the account holder’s death.
 Life Expectancy
The number of years a person is expected to live using standard actuarial assumptions.
 Life Expectancy Tables
Life Expectancy Tables provided by the Internal Revenue Service (IRS) to determine the proper life expectancy factor. See IRS Publication 590.
 Non-individual Beneficiary
An entity that does not have a life expectancy, such as a charity or foundation, or non-qualifying trust. There are special rules that apply when a non-individual is named as a beneficiary, even if there are other beneficiary(ies) also named.
 Qualified Disclaimer
A qualified disclaimer is an irrevocable and unqualified refusal to accept any interest in a property, but only if certain conditions are met.
 Required Minimum Distribution (RMD)
Withdrawals made from certain IRAs and employer plans when the account holder has reached a certain age or event.