Qualified Plan Distributions After Death
Course: Retirement Planning
Lesson 7: Income Distribution Planning for Qualified Plans
Student Question:
Hi-
The lesson says:
Annual distributions are required in years 1 – 9 if the participant died after his or her required beginning date. Any undistributed amount must then be distributed no later than December 31 of the tenth year following the year of the participant’s death.
How are the annual distributions in years 1-9 calculated?
Thanks
Instructor Response:
Great to hear from you.
So this is well beyond what you need to know for our program and for the CFP® exam, but here’s the very quick overview: When someone dies after their required beginning date, the beneficiary must take small annual distributions based on a life-expectancy factor for the first nine years, and then whatever remains has to be fully distributed by the end of the tenth year. You don’t need to memorize how the factors work—just know that the annual amounts are calculated using IRS life-expectancy tables and get a little larger each year.
Let me know any questions!
