Publication 575 - Pension And Annuity Income - 2002 Page 29
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34and new rules. Check with your plan administrator to see
rule 2 if the employee has a designated beneficiary and
which rules your plan follows.
under rule 1 if the employee does not have a designated
beneficiary.
Distributions under rule 2 generally must begin by De-
Required distributions. By the required beginning date,
cember 31 of the year following the year of the employee’s
as explained above, you must either:
death. However, if the surviving spouse is the beneficiary,
•
Receive your entire interest in the plan (for a
distributions need not begin until December 31 of the year
tax-sheltered annuity, your entire benefit accruing
the employee would have reached age 70
1
/
, if later.
2
after 1986), or
If the surviving spouse is the designated beneficiary and
•
distributions are to be made under rule 2, a special rule
Begin receiving periodic distributions in annual
applies if the spouse dies after the employee but before
amounts calculated to distribute your entire interest
distributions are required to begin. In this case, distribu-
(for a tax-sheltered annuity, your entire benefit ac-
tions may be made to the spouse’s beneficiary under either
cruing after 1986) over your life or life expectancy or
rule 1 or rule 2, as though the beneficiary were the
over the joint lives or joint life expectancies of you
employee’s beneficiary and the employee died on the
and a designated beneficiary (or over a shorter pe-
spouse’s date of death. However, if the surviving spouse
riod).
remarries after the employee’s death and the new spouse
is designated as the spouse’s beneficiary, this special rule
After the starting year for periodic distributions, you must
applicable to surviving spouses does not apply to the new
receive the minimum required distribution for each year by
spouse.
December 31 of that year. (The starting year is the year in
which you reach age 70
1
/
or retire, whichever applies in
2
Minimum distributions from an annuity plan. Special
determining your required beginning date.) If no distribu-
rules may apply if you receive distributions from your
tion is made in your starting year, the minimum required
retirement plan in the form of an annuity. Your plan admin-
distributions for 2 years must be made the following year
istrator should be able to give you information about these
(one by April 1 and one by December 31).
rules.
Example. You retired under a qualified employee plan
Minimum distributions from an individual account
in 2001. You reached age 70
1
/
on August 20, 2002. For
2
plan. If there is an account balance to be distributed from
2002 (your starting year), you must receive a minimum
your plan (not as an annuity), your plan administrator must
amount from your retirement plan by April 1, 2003. You
figure the minimum amount that must be distributed from
must receive the minimum required distribution for 2003 by
the plan each year.
December 31, 2003.
Your plan administrator will use rules similar to the rules
Distributions after the employee’s death. If the em-
that are used to figure required distributions from tradi-
ployee was receiving periodic distributions before his or
tional IRAs. The IRA rules are discussed in Publication
her death, any payments not made as of the time of death
590.
must be distributed at least as rapidly as under the distribu-
Your plan administrator should be able to give you
tion method being used at the date of death.
information about how the amount of your required distri-
If the employee dies before the required beginning
bution was figured.
date, the entire account must be distributed under one of
What types of installments are allowed? The mini-
the following rules.
mum amount that must be distributed for any year may be
•
Rule 1. The distribution must be completed by De-
made in a series of installments (for example, monthly or
cember 31 of the fifth year following the year of the
quarterly) as long as the total payments for the year made
employee’s death.
by the date required are not less than the minimum amount
•
required for the year.
Rule 2. The distribution must be made in annual
amounts over the life or life expectancy of the desig-
More than minimum. Your plan can distribute more in
nated beneficiary.
any year than the minimum amount required for that year
but, if it does, you will not receive credit for the additional
The terms of the plan determine which of these two rules
amount in determining the minimum amount required for
applies. If the plan permits the employee or the beneficiary
future years. However, any amount distributed in your
to choose the rule that applies, this choice must be made
starting year will be credited toward the amount required to
by the earliest date a distribution would be required under
be distributed by April 1 of the following year.
either of the rules. Generally, this date is December 31 of
the year following the year of the employee’s death.
Combining multiple accounts to satisfy the minimum
If the employee or the beneficiary did not choose either
distribution requirements. Generally, the required mini-
rule and the plan does not specify the one that applies,
mum distribution must be figured separately for each ac-
distribution generally must be made under rule 2 if the
count. Each qualified employee retirement plan and
beneficiary is the surviving spouse and under rule 1 if the
qualified annuity plan must be considered individually in
beneficiary is someone other than the surviving spouse.
satisfying its distribution requirements. However, if you
However, if your plan adopted the new rules proposed by
have more than one tax-sheltered annuity account, you
the IRS in 2001 or 2002, distribution must be made under
can total the required distributions and then satisfy the
Page 29
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