Common use of Beneficiary Determination Clause in Contracts

Beneficiary Determination. Named beneficiaries who completely If your spouse beneficiary elects or otherwise has to take the distribute their interests in your IRA, or completely disclaim their single life expectancy option, he/she will use a life expectancy interests in your IRA under IRC Section 2518, will not be divisor for calculating that year's RMD. If you die before your considered when designated beneficiaries are determined. Named RBD, your surviving spouse can postpone commencement of beneficiaries who die after your death but before the determination his/her RMDs until the end of the year in which you would have date (September 30 of the year following the year of your death) will attained age 73. If you die on or after your RBD, your surviving still be considered for the sake of determining the distribution spouse will use the longer of his/her single life expectancy, period. If any named beneficiary that is not an individual, such as an determined each year after the year of death using his/her estate or charity, has an interest in your IRA on the determination attained age, or your remaining single life expectancy determined date, and separate accounting does not apply, your IRA will be in your year of death and reduced by one each subsequent year. treated as having no designated beneficiary (i.e., not a designated If your spouse beneficiary chooses the ten-year rule, he/she is beneficiary). required to remove all assets from the IRA by December 31 of 6. Qualifying Trusts. If you name a qualifying trust, which is defined the tenth year following the year of your death. in Treasury Regulations, as your IRA beneficiary, the beneficiaries Your spouse beneficiary can treat your IRA as his/her own IRA of the qualifying trust are treated as the beneficiaries of your IRA if your spouse is the only designated beneficiary, or if there are for purposes of determining the appropriate distribution period. A multiple designated beneficiaries and separate accounting applies. qualifying trust provides documentation of its beneficiaries to the He/she has this option even if he/she had chosen one of the other trustee. options above. This generally happens after any of your 7. Successor Beneficiaries. Our policy may allow your beneficiaries remaining RMD amount for the year of your death has been to name their own successor beneficiaries to your IRA. A successor distributed. beneficiary would receive any of your IRA assets that remain after your death and the subsequent death of your beneficiaries. Federal Tax Penalties and IRS Form 5329. Several tax penalties may Generally, the beneficiary will have to distribute all the remaining apply to your various IRA transactions, and are in addition to any federal, IRA assets within a ten-year period or the remainder of the original state, or local taxes. Federal penalties and excise taxes are generally beneficiary's ten-year period. reported and remitted to the IRS by completing IRS Form 5329,

Beneficiary Determination. Named beneficiaries who completely If included in your spouse beneficiary elects or otherwise has to take the gross estate for estate tax purposes, regardless of distribute their interests in your SIMPLE IRA, or completely the named beneficiary or manner of distribution. There is no disclaim their single life expectancy option, he/she will use a life expectancy interests in your SIMPLE IRA under IRC Section specific estate tax exclusion for assets held within a SIMPLE IRA. 2518, will not be divisor for calculating that year's RMD. If you die before your considered when designated beneficiaries are After your death, beneficiaries should pay careful attention to the determined. Named RBD, your surviving spouse can postpone commencement of beneficiaries who die after your death but rules for the disclaiming any portion of your SIMPLE IRA under before the determination his/her RMDs until the end of the year in which you would have date (September 30 of the year following IRC Section 2518. the year of your death) will attained age 73. If you die on or after your RBD, your surviving still be considered for the sake of 5. Federal Income Tax Withholding. SIMPLE IRA distributions are determining the distribution spouse will use the longer of his/her single life expectancy, period. If any named beneficiary that is subject to federal income tax withholding unless you or, upon your not an individual, such as an determined each year after the year of death using his/her estate or charity, has an interest in death, your beneficiary affirmatively elect not to have withholding your SIMPLE IRA on the determination attained age, or your remaining single life expectancy determined date, and separate apply. The required federal income tax withholding rate is 10 accounting does not apply, your SIMPLE IRA will be in your year of death and reduced by one each subsequent year. treated as percent of the distribution. Upon your request for a distribution we having no designated beneficiary (i.e., not a designated If your spouse beneficiary chooses the ten-year rule, he/she is beneficiary). required to remove all assets from the IRA will notify you, by December 31 providing IRS Form W-4R, of your right to 6. Qualifying Trusts. If you name a qualifying trust, which is defined the tenth year following the year of your deathwaive withholding or elect to have greater than 10 percent withheld. in Treasury Regulations, as your SIMPLE IRA beneficiary, the beneficiaries Your spouse beneficiary can treat Annual Statements. Each year we will furnish you and the IRS with excise tax applies each year that the excess contribution remains in statements reflecting the activity in your SIMPLE IRA. You and the IRS your SIMPLE IRA. will receive IRS Forms 5498, IRA as his/her own IRA Contribution Information, and 1099-R, In order for you to avoid a 6 percent excess contribution penalty, Distributions From Pensions, Annuities, Retirement or Profit-Sharing excess contributions may generally be removed with earnings by Plans, IRAs, Insurance Contracts, etc. IRS Form 5498 or an appropriate your tax-filing due date, including extensions. If you timely file your substitute indicates the fair market value of the qualifying trust account, including federal income tax return, you may still be able to remove your SIMPLE IRA contributions, for the year. IRS Form 1099-R reflects your excess contribution, plus attributable earnings, as late as October 15 SIMPLE IRA distributions for the year. for calendar year filers. Excess contributions are treated as the beneficiaries generally included By January 31 of each year, you will receive a report of your fair in your income. Your SIMPLE IRA if your spouse is the only designated beneficiary, or if there are for purposes of determining the appropriate distribution period. A multiple designated beneficiaries and separate accounting applies. qualifying trust provides documentation of its beneficiaries to the He/she has this option even if he/she had chosen one excesses cannot be market value as of the other trusteeprevious calendar year end. options aboveIf applicable, you will recharacterized and cannot be used as a traditional IRA contribution. This generally happens after any of also receive a report concerning your 7annual RMD. Successor Beneficiaries. Our policy may allow your beneficiaries remaining RMD amount for the year of your death Your employer should inform you when an excess contribution has been to name their own successor beneficiaries to your IRA. A successor distributed. beneficiary would receive any of your IRA assets that remain after your death and the subsequent death of your beneficiaries. Federal Tax Penalties and IRS Form 5329. Several tax penalties may Generallyoccurred along with the steps needed to correct it, the beneficiary will have to distribute all the remaining including its use apply to your various SIMPLE IRA transactions, and are in addition to of the EPCRS. any federal, IRA assets within a ten-year period or the remainder of the original state, state or local taxes. Federal penalties and excise taxes are 3. Excess Accumulation Penalty Tax. Any portion of an RMD that is generally beneficiary's ten-year period. reported and remitted to the IRS by completing IRS Form 5329,, not distributed by its deadline is subject to an excess accumulation Additional Taxes on Qualified Plans (Including IRAs) and Other penalty tax of up to 25 percent. The IRS may waive this penalty Tax-Favored Accounts, and attaching the form to your federal income tax upon your proof of reasonable error and that reasonable steps were return. The penalties may include any of the following taxes: taken to correct the error, including remedying the shortfall. See

Beneficiary Determination. Named beneficiaries who completely If your spouse beneficiary elects or otherwise has to take the distribute their interests in your IRA, or completely disclaim their single life expectancy option, he/she will use a life expectancy interests in your IRA under IRC Section 2518, will not be divisor for calculating that year's RMD. If you die before your considered when designated beneficiaries are determined. Named RBD, your surviving spouse can postpone commencement of beneficiaries who die after your death but before the determination his/her RMDs until the end of the year in which you would have date (September 30 of the year following the year of your death) will attained age 73. If you die on or after your RBD, your surviving still be considered for the sake of determining the distribution spouse will use the longer of his/her single life expectancy, period. If any named beneficiary that is not an individual, such as an determined each year after the year of death using his/her estate or charity, has an interest in your IRA on the determination attained age, or your remaining single life expectancy determined date, and separate accounting does not apply, your IRA will be in your year of death and reduced by one each subsequent year. treated as having no designated beneficiary (i.e., not a designated If your spouse beneficiary chooses the ten-year rule, he/she is beneficiary). required to remove all assets from the IRA by December 31 of 6. Qualifying Trusts. If you name a qualifying trust, which is defined the tenth year following the year of your death. in Treasury Regulations, as your IRA beneficiary, the beneficiaries Your spouse beneficiary can treat your IRA as his/her own IRA of the qualifying trust are treated as the beneficiaries of your IRA if your spouse is the only designated beneficiary, or if there are for purposes of determining the appropriate distribution period. A multiple designated beneficiaries and separate accounting applies. qualifying trust provides documentation of its beneficiaries to the He/she has this option even if he/she had chosen one of the other trustee. options above. This generally happens after any of your 7. Successor Beneficiaries. Our policy may allow your beneficiaries remaining RMD amount for the year of your death has been to name their own successor beneficiaries to your IRA. A successor distributed. beneficiary would receive any of your IRA assets that remain after your death and the subsequent death of your beneficiaries. Federal Tax Penalties and IRS Form 5329. Several tax penalties may Generally, the beneficiary will have to distribute all the remaining apply to your various IRA transactions, and are in addition to any federal, IRA assets within a ten-year period or the remainder of the original state, or local taxes. Federal penalties and excise taxes are generally beneficiary's ten-year period. reported and remitted to the IRS by completing IRS Form 5329,, 8. Separate Accounting (Multiple Beneficiaries). Our policies may Additional Taxes on Qualified Plans (Including IRAs) and Other permit separate accounting to be applied to your IRA for the benefit Tax-Favored Accounts, and attaching the form to your federal income tax of your beneficiaries. If permitted, separate accounting must be return. The penalties may include any of the following taxes: