Old Test Your Knowledge

The following questions provide a quick way to gauge your knowledge of required distributions from IRA's, qualified retirement plans and TSA's. Everyone with assets in a retirement plan, regardless of his or her age, or the beneficiary of such plans needs to have a reasonable understanding of minimum required distributions. In certain circumstances, that understanding can be more valuable than the selection of a prudent investment.

Explain the difference between a Designated Beneficiary and a recipient named on the beneficiary designation form for a qualified retirement plan, IRA or TSA.

Describe the options available to a non-spouse beneficiary of an IRA who wishes to avoid an immediate payout of the decedent’s account and the subsequent tax liability.

What complications arise if you name a charity as beneficiary for a portion the assets in your qualified retirement plans, IRA's or TSA's?

Why should a married couple seldom, if ever, elect to redetermine the life expectancy of both spouses when computing required distributions at age 70½ and beyond?

List the four requisites a revocable trust must fulfill in order for it to serve as a suitable beneficiary for required distribution purposes under IRC §401(a)(9).

If a single parent with an IRA is approaching age 70½ or an 80-year-old widow(er) is about to establish a spousal rollover, why is it important for him or her to elect a primary method for calculating required distributions if the children are named as beneficiaries of the account?

If you feel hesitant about your answers to these questions, seek assistance from a knowledgeable tax professional. You will know that person truly understands this subject if he or she can readily answer the same questions. In the event you receive a vague or evasive response, please contact another professional. The decisions you must make are too important to rely on guesswork or incompetent advice.