Common use of Minimum Distribution Requirements Clause in Contracts

Minimum Distribution Requirements. If the amount distributed to you for any tax year after you reach age 70 1/2 is less than the minimum amount required by law, the IRS may impose a penalty tax equal to 50% of any such deficiency unless it is satisfied that reasonable steps are being taken to remedy the deficiency. The amount required to be distributed in any year is generally based on your life expectancy or the joint life expectancies of you and your designated Beneficiary. However, if your Beneficiary is not your spouse, the law imposes an additional requirement which is called the minimum distribution incidental benefit requirement. In general, this requirement is designed to prevent you from naming a Beneficiary who is much younger than yourself in order to extend your payout period. You may wish to consult your tax advisor to determine your minimum distribution. These rules on distribution apply equally to Spousal IRAs. Distribution of Nondeductible Contributions. Withdrawals which include nondeductible contributions will be treated as part taxable and part nontaxable. The amount considered nontaxable is the portion which bears the same ratio to the total distribution that your aggregate nondeductible contributions bear to your Account balance at the end of the year for all of your IRAs, plus adding back any distributions for the year. The 10% tax penalty on distributions prior to age 59 1/2 will apply for the taxable portion of the distribution. Penalty for Excess Distributions. A 15% tax penalty is imposed on the sum of all annual distributions received during the calendar year in excess of $150,000 (or $112,500 adjusted for cost of living increases, if higher). Please consult with your tax advisor for more complete information, including the availability of favorable elections. The excess distribution penalty tax will not apply to a distribution of nondeductible contributions, or a distribution to an alternate payee under a qualified domestic relations order. Estate and Gift Tax Exemption. Generally, your XXX will be included in your estate for Federal estate tax purposes. Your XXX may qualify for a deduction for purposes of that tax if the Beneficiary is your spouse. Designation of a Beneficiary to receive your XXX on your death is not treated as a gift subject to the Federal gift tax.

Minimum Distribution Requirements. If the amount distributed to you for any tax year after you reach age 70 1/2 is less than the minimum amount required by law, the IRS may impose a penalty tax equal to 50% of any such deficiency unless it is satisfied that reasonable steps are being taken to remedy the deficiency. The amount required to be distributed in any year is generally based on your life expectancy or the joint life expectancies of you and your designated Beneficiary. However, if your Beneficiary is not your spouse, the law imposes an additional requirement which is called the minimum distribution incidental benefit requirement. In general, this requirement is designed to prevent you from naming a Beneficiary who is much younger than yourself in order to extend your payout period. You may wish to consult your tax advisor to determine your minimum distribution. These rules on distribution apply equally to Spousal IRAs. Distribution of Nondeductible Contributions. Withdrawals which include nondeductible contributions will be treated as part taxable and part nontaxable. The amount considered nontaxable is the portion which bears the same ratio to the total distribution that your aggregate nondeductible contributions bear to your Account balance at the end of the year for all of your IRAs, plus adding back any distributions for the year. The 10% tax penalty on distributions prior to age 59 1/2 will apply for the taxable portion of the distribution. Penalty for Excess Distributions. A 15% tax penalty is imposed on the sum of all annual distributions received during the calendar year in excess of $150,000 (or $112,500 adjusted for cost of living increases, if higher). Please consult with your tax advisor for more complete information, including the availability of favorable elections. The excess distribution penalty tax will not apply to a distribution of nondeductible contributions, or a distribution to an alternate payee under a qualified domestic relations order. Estate and Gift Tax Exemption. Generally, your XXX IRA will be included in your estate estaxx for Federal estate tax purposes. Your XXX IRA may qualify for a deduction for fxx purposes of that tax if the Beneficiary is your spouse. Designation of a Beneficiary to receive your XXX IRA on your death is not treated as xx a gift subject to the Federal gift tax.