We are setting up guidelines for our calculation methods for RMD's. We heard a rumor that a client can switch between the single and joint life expectancy and were unaware that this option existed.

We were aware that a client can elect calculation/nonrelcalc, but have never heard about a separate option to elect between single/joint. We had always thought that one needed to rely upon the most current beneficiary designation when determining the life expectancy factor used in the denominator.

If a client indeed can elect between single/joint, wouldn't that mean they would need to change their beneficiary designation from year to year?

Need to know if anyone has heard of this option, or if this is just a rumor. P.s. not finding anything clear in the Code - a code reference would be helpful if this rumor is in fact true. Thanks,

None of this (recalc/non recalc or single/joint) is relevant any more. Everyone uses the Uniform Distribution Table.

In truth, the single/joint was not relevant even under the old rules. The IRS position was that if you had a beneficiary, your MINIMUM distribution was computed on the joint life basis. If you wanted to use the single life basis, that just meant you were taking more than the MINIMUM, which is always permitted.

Barry is absolutely correct, as usual.

There is nothing in the Code to direct you to because all of these changes are in the proposed regulations for Sec. 401(a)(9). The initial proposed regulations came out in 1987 and were never finalize. The current set was issued in January of this year and the WSJ reports that they will be finalized by year end.

Beginning of 2002 is now a better guess on the finalization of the new regs.

Will they tell us before year-end whether beneficiaries of persons who died before 2000 can use the new rules in calculating their required distributions for 2001?

Bruce,

I doubt it. I think the official line will be to use the more conservative method to be safe.

On the other hand, if you're willing to fight you can always use the new rules and then try to avoid the 50% if the final regs come out against you.

Good luck!

Barry