Common use of Following the Year You Attain Age 70½ Clause in Contracts

Following the Year You Attain Age 70½. If you die on or after April 1 following the year you attain age 70½, the designated beneficiary(ies) must continue taking distributions from your IRA. The time frame for receiving payouts is the longer of the remaining single life expectancy of the applicable designated beneficiary or your remaining single life expectancy factor determined as of the year of your death. Distributions must commence by December 31 of the calendar year following your death. If your designated beneficiary is not an individual or a qualified trust, your IRA must be distributed using your single life expectancy (had you not died) reduced by one each year. Your beneficiary(ies) must withdraw your required minimum distribution for the year of your death if you do not withdraw it before your death. If your surviving spouse is the sole designated beneficiary of your IRA, they may treat your IRA as their own IRA by redesignating your IRA as his or her own IRA, failing to take a required distribution as a beneficiary, or by making a contribution. Regardless of whether your spouse is the sole designated beneficiary, they may roll distributions from your IRA into their own IRA generally within 60 days of receipt. Additional restrictions may apply. Excess Accumulation Penalty. If your beneficiary does not withdraw the amount required to be distributed each year on or before December 31, they may be subject to a 50% excess accumulation penalty tax on the amount not distributed as required. They must report the 50% excess accumulation penalty tax by filing a completed Form 5329 with the IRS along with their payment. For taxable years beginning after December 29, 2022, the amount of the excess accumulation penalty tax is reduced from 50% to 25%. The penalty is further reduced to 10% for beneficiaries who take a corrective distribution and submit a modified federal income return within the applicable correction window. Beneficiaries should consult a tax and/or legal advisor for the correction window applicable to their specific circumstances. Required Distributions to Successor Beneficiaries. Distributions following the death of your beneficiary must be withdrawn by the successor beneficiary(ies) as required by the Code and Regulations including any annual required minimum distributions and the depletion of the entire remaining interest in the Inherited IRA no later than the applicable deadline. The applicable deadline by which the Inherited IRA must be depleted by a successor beneficiary is generally the end of the tenth calendar year following your beneficiary’s death or earlier, depending on the circumstances. Failure to withdraw required distributions or deplete the Inherited IRA may result in an excess accumulation penalty. BENEFICIARY DISTRIBUTIONS – DEATH OF IRA OWNER ON OR AFTER JANUARY 1, 2020 Any amounts remaining in your IRA at your death will be paid to your beneficiary(ies) as required under the Code and Treasury Regulations.