Beneficiary of proceeds of qualified plan not entitled to five-year averaging on a lump sum distribution

Article Abstract:

The Tax Court ruled in Cebula v. Commissioner that a spouse receiving a lump sum distribution from her deceased husband's retirement plan could not take advantage of five-year forward averaging under IRC 402(e)(4)(A) because the husband had not reached age 59 1/2 when he died and his employment was terminated. The issue before the court was whether the IRC age requirement applied to the spouse since her husband had not reached age 59 1/2 when he died. The court rejected the spouse's arguments that the IRC provision related only to distributions to employee participants, not their beneficiaries.

Cases, Beneficiaries, Income averaging

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IRS provides guidance on revised minimum distribution rules

Article Abstract:

The IRS has issued Notice 96-67 to address transitional issues raised by the amendment of the required beginning date rules under IRC section 401(a)(9). The Small Business Job Protection Act of 1996 amended section 401(a)(9) to make the required beginning date for qualified benefit plans and individual retirement accounts the later of the year after the participant either retires or reaches age 70 1/2. The Notice addresses how distributions made in 1996 to participants that have reached 70 1/2 but have not retired should be treated.

Pension Fund Coverage & Benefits, Pensions

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IRS issues further guidance on plan amendments to implement revised minimum distribution rules

Article Abstract:

The IRS has issued guidance on plan amendment timing issues that have arisen as a result of revisions to IRC section 401(a)(9) modifying qualified plan distribution rules. The required beginning date for distributions was changed to be the later of April 1 of the year following the year that the employee turns age 70 1/2 or the year that the employee retires. The IRS has announced that plans may begin to offer these new distribution options prior to amending the plan to provide for distribution deferred until retirement.

Retirement Benefits

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