Practical Points

AuthorSeymour Goldberg
ProfessionSenior partner in the law firm of Goldberg & Goldberg, P.C., Woodbury, New York
1. The author uses the term “beneficiary” instead of “designated
beneficiary” throughout this guide. If the beneficiary is an in-
dividual, then the beneficiary is considered to be a “designated
2. A trust is beneficiary, not a designated beneficiary. However, if
strict IRS compliance rules are satisfied, then the beneficiary of
the trust is considered to be a “designated beneficiary.”
3. Designated beneficiary status is necessary in order to use life
expectancy payout periods under the IRS rules.
4. An “inherited IRA” is an IRA that is payable to a nonspouse
designated beneficiary. The author uses nonspouse beneficiary in-
stead of nonspouse designated beneficiary throughout this guide.
5. A designated beneficiary is an individual who is a beneficiary of
an IRA owner’s account as of the date of death of the IRA owner.
An estate, charity, or a trust is not considered a designated benefi-
ciary. However, as previously mentioned, if a trust satisfies certain
strict IRS compliance requirements, then the beneficiary of the
trust is generally considered to be a designated beneficiary. This
also assumes that the trust is worded properly.
6. According to the IRS rules, if the beneficiary survives the IRA
owner and remains a beneficiary as of September 30 of the year
following the IRA owner’s year of death, then the life expectancy
of the designated beneficiary can be used in determining the
required minimum distributions from the deceased IRA owner’s
account. The author refers to the period between the IRA own-
er’s date of death and September 30 of the year following the
IRA owner’s death as the “standard gap period.” The IRS takes
a realistic position and states that if the beneficiary of the IRA
owner dies during the “standard gap period,” then that beneficiary
continues to be treated as the designated beneficiary for purposes
of determining the distribution period. The payments would then
be made over the applicable distribution period to the beneficia-

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT