If, however, the participant designates his or her spouse as sole beneficiary and the spouse is more than 10 years younger than the participant, the factor may, instead, be based on the joint life expectancy of the participant and his or her spouse. This means, among other things, that if a beneficiary cashes out or disclaims his or her share in the deceased s account before this date, the beneficiary will not be included in the determination. A measuring beneficiary is the beneficiary over whose life expectancy the distribution period is determined and thus, only individuals can be measuring beneficiaries. If a deceased participant s account is segregated into separate beneficiary accounts by this date, each beneficiary, if an individual, will be considered the measuring beneficiary of his or her own account and thus will be able to take distributions over his or her separate single life expectancy. If the account is not segregated by this date, however, distributions must be paid over the life expectancy of the oldest beneficiary.
Special rules apply if there is no measuring beneficiary.
This will relieve the calculation burden placed on participants and beneficiaries, while also facilitating compliance with the RMD and death distribution requirements. In other words, the IRS hopes to counterbalance its loss in tax revenue from reduced RMD and death distribution amounts with an increase in tax revenue from the anticipated improvement in compliance. Even if the regulations are subsequently revised, there will be no retroactive or adverse effect on RMD computations made in accordance with the regulations as originally issued. Before determining any course of action, participants should realize that given these regulatory changes, assets may remain tax-deferred within the IRA account for a much longer period of time than would have been possible in most cases under the existing rules. Most important, all IRA participants, especially those already taking RMDs, should contact their Financial Advisors to review their IRA beneficiary designations.