Common use of Beneficiary Determination Clause in Contracts

Beneficiary Determination. Named beneficiaries who completely If your spouse beneficiary elects or otherwise has to take the distribute their interests in your IRA, or completely disclaim their single life expectancy option, he/she will use a life expectancy interests in your IRA under IRC Section 2518, will not be divisor for calculating that year's RMD. If you die before your considered when designated beneficiaries are determined. Named RBD, your surviving spouse can postpone commencement of beneficiaries who die after your death but before the determination his/her RMDs until the end of the year in which you would have date (September 30 of the year following the year of your death) will attained age 73. If you die on or after your RBD, your surviving still be considered for the sake of determining the distribution spouse will use the longer of his/her single life expectancy, period. If any named beneficiary that is not an individual, such as an determined each year after the year of death using his/her estate or charity, has an interest in your IRA on the determination attained age, or your remaining single life expectancy determined date, and separate accounting does not apply, your IRA will be in your year of death and reduced by one each subsequent year. treated as having no designated beneficiary (i.e., not a designated If your spouse beneficiary chooses the ten-year rule, he/she is beneficiary). required to remove all assets from the IRA by December 31 of 6. Qualifying Trusts. If you name a qualifying trust, which is defined the tenth year following the year of your death. in Treasury Regulations, as your IRA beneficiary, the beneficiaries Your spouse beneficiary can treat your IRA as his/her own IRA of the qualifying trust are treated as the beneficiaries of your IRA if your spouse is the only designated beneficiary, or if there are for purposes of determining the appropriate distribution period. A multiple designated beneficiaries and separate accounting applies. qualifying trust provides documentation of its beneficiaries to the He/she has this option even if he/she had chosen one of the other trustee. options above. This generally happens after any of your 7. Successor Beneficiaries. Our policy may allow your beneficiaries remaining RMD amount for the year of your death has been to name their own successor beneficiaries to your IRA. A successor distributed. beneficiary would receive any of your IRA assets that remain after your death and the subsequent death of your beneficiaries. Federal Tax Penalties and IRS Form 5329. Several tax penalties may Generally, the beneficiary will have to distribute all the remaining apply to your various IRA transactions, and are in addition to any federal, IRA assets within a ten-year period or the remainder of the original state, or local taxes. Federal penalties and excise taxes are generally beneficiary's ten-year period. reported and remitted to the IRS by completing IRS Form 5329,

Beneficiary Determination. Named beneficiaries who completely If your spouse beneficiary elects or otherwise has to take the distribute their interests in your IRA, or completely disclaim their single life expectancy option, he/she will use a life expectancy interests in your IRA under IRC Section 2518, will not be divisor for calculating that year's RMD. If you die before your considered when designated beneficiaries are determined. Named RBD, your surviving spouse can postpone commencement of beneficiaries who die after your death but before the determination his/her RMDs until the end of the year in which you would have date (September 30 of the year following the year of your death) will attained age 73. If you die on or after your RBD, your surviving still be considered for the sake of determining the distribution spouse will use the longer of his/her single life expectancy, period. If any named beneficiary that is not an individual, such as an determined each year after the year of death using his/her estate or charity, has an interest in your IRA on the determination attained age, or your remaining single life expectancy determined date, and separate accounting does not apply, your IRA will be in your year of death and reduced by one each subsequent year. treated as having no designated beneficiary (i.e., not a designated If your spouse beneficiary chooses the ten-year rule, he/she is beneficiary). required to remove all assets from the IRA by December 31 of 6. Qualifying Trusts. If you name a qualifying trust, which is defined the tenth year following the year of your death. in Treasury Regulations, as your IRA beneficiary, the beneficiaries Your spouse beneficiary can treat your IRA as his/her own IRA of the qualifying trust are treated as the beneficiaries of your IRA if your spouse is the only designated beneficiary, or if there are for purposes of determining the appropriate distribution period. A multiple designated beneficiaries and separate accounting applies. qualifying trust provides documentation of its beneficiaries to the He/she has this option even if he/she had chosen one of the other trustee. options above. This generally happens after any of your 7. Successor Beneficiaries. Our policy may allow your beneficiaries remaining RMD amount for the year of your death has been to name their own successor beneficiaries to your IRA. A successor distributed. beneficiary would receive any of your IRA assets that remain after your death and the subsequent death of your beneficiaries. Federal Tax Penalties and IRS Form 5329. Several tax penalties may Generally, the beneficiary will have to distribute all the remaining apply to your various IRA transactions, and are in addition to any federal, IRA assets within a ten-year period or the remainder of the original state, or local taxes. Federal penalties and excise taxes are generally beneficiary's ten-year period. reported and remitted to the IRS by completing IRS Form 5329,, 8. Separate Accounting (Multiple Beneficiaries). Our policies may Additional Taxes on Qualified Plans (Including IRAs) and Other permit separate accounting to be applied to your IRA for the benefit Tax-Favored Accounts, and attaching the form to your federal income tax of your beneficiaries. If permitted, separate accounting must be return. The penalties may include any of the following taxes: