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Better Examples Sought for Proposed Regs on RMD Calculations

DEC. 31, 2019

Better Examples Sought for Proposed Regs on RMD Calculations

DATED DEC. 31, 2019

DOCUMENT ATTRIBUTES

Code Sections
Section 401
Subject Area/Tax Topics
Benefits and pensions
Jurisdictions
United States
Tax Analysts Document Number
2020-2208
Tax Analysts Electronic Citation
2020 TNTF 13-45

PUBLIC SUBMISSION

Docket: IRS-2019-0050
Updated Life Expectancy and Distribution Period Tables Used for Purposes of Determining Minimum Required Distributions (REG-132210-18)

Comment On: IRS-2019-0050-0001
Updated Life Expectancy and Distribution Period Tables Used for Purposes of Determining Minimum Required Distributions

Document: IRS-2019-0050-0046
Comment from Chuck 2009X,

Submitter Information

Name: Chuck 2009X

General Comment

I'm confused by the wording and examples given for the transition rules in paragraphs 41, 42, and 43.

Specifically, paragraph 42 states that the transition rule applies in 3 cases:

(1) The employee died before the required beginning date with a non-spousal designated beneficiary (so that the applicable distribution period is determined based on the remaining life expectancy of the designated beneficiary for the calendar year following the calendar year of the employee's death); (2) the employee died after the required beginning date without a designated beneficiary (so that the applicable distribution period is determined based on the remaining life expectancy of the employee for the year of the employee's death); and (3) the employee, who is younger than the designated beneficiary, died after the required beginning date (so that the applicable distribution period is determined based on the remaining life expectancy of the employee for the year of the employee's death).

In paragraph 43, an example is given in which the transition rule is applied, but it meets none of the transition criteria:

"The proposed regulations illustrate the application of this transition rule with an example involving an employee who died at age 80 in 2018 with a designated beneficiary (who was not the employee's spouse) who was age 75 in the year of the employee's death." The remainder of paragraph 43 indicates that this beneficiary would be eligible for the reset. However:

It seemingly doesn't meet criteria 1 because the employee died after the required beginning date, not before it

It doesn't meet criteria 2 because there is a designated beneficiary

It doesn't meet criteria 3 because the employee was older than the beneficiary

In my case, I am a non-spousal (child) beneficiary inheriting an IRA in 2019. The employee died in November 2019 and was more than 10 years older than me. Because the date of the employee's death is prior to the effective date of provisions of the SECURE Act, I will be able to take life expectancy RMDs based on the Single Life Table, beginning in 2020, with the divisor reduced by 1 each year. I can't tell from the wording of paragraphs 41 to 43 (or the rest of that section) whether I will be eligible for the reset when it occurs. I may not be comprehending the verbiage correctly, but perhaps an additional (or different) example would be helpful.

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