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RMD Calculator Dialog 6 - Successor Beneficiaries

 
Review the RMD Calculator Dialogs - Selector article if you are uncertain about the RMD scenario.
 
This article provides guidance to calculate Required Minimum Distributions (RMDs) for Successor Beneficiaries who inherit retirement accounts from Primary Beneficiaries (defined below) under the 2020 RMD Rules, including the 10-Year Rule exceptions.
 
The Primary Beneficiary must have died after 2019 to use this RMD Calculator Dialog 6 - Successor Beneficiaries. For deaths before 2020, use RMD Calculator Dialogs 1 through 5, depending upon the circumstances.
 
 
 
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Definitions
 

Primary Beneficiary [IMPORTANT DEFINITION for SUCCESSOR BENEFICIAIRIES]

The person who died, whose date of death sets the beginning of the 10-Year Rule distribution period, as applicable. The so-called Primary Beneficiary may be the Participant, the Participant's spouse, a Designated Beneficiary, or other person who died after 2019. The Primary Beneficiary name does not change during the 10-Year Rule distribution period, regardless of who is actually receiving distrbutions.
 

Successor Beneficiary

A person who inherits the account from a Primary Beneficiary, or other Successor Beneficiary post-SECURE Act. All Successor Beneficiaries step into the shoes of the Primary Beneficiary and continue the 10-Year payout period. There are no 10-Year Rule "resets." All Successor Beneficiaries to Successor Beneficiaries are also classed, simply, as Successor Beneficiaries.
 

Eligible Designated Beneficiary (EDBs)

Created under the SECURE Act of 2019, Eligible Designated Beneficiaries (EDBs) are defined as follows:
 

Non-Eligible Designated Beneficiary

A Designated Beneficiary who is not an Eligible Designated Beneficiary (EDB) under the SECURE Act of 2019.
 
 
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Successor Beneficiaries Scenarios
 
Gold Subheadings are used below to differentiate the circumstances.
 
Scenario 6A:  Decedent under 2001 Rules Becomes
Primary Beneficiary under 2020 Rules.
Scenario 6B:  Successor Beneficiary Died.
 
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Other Successor Beneficiary Scenarios

Successor Beneficiary to pre-SECURE-Act Designated Beneficiary
(2001 Rules)

Successor Beneficiaries to post-SECURE-Act Eligible Designated Beneficiaries


(2020 Rules)

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Scenario 6A:  Designated Beneficiary under 2001 Rules Becomes
Primary Beneficiary under 2020 Rules.
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Create a Contact Record for the Participant

1.  Enter the name of the Participant as a Contact, including the Birth Date. The Birth Date is not required for calculational purposes but is helpful to track multi-generational Contacts. If no Birth Date is present in Advantage, the RMD Calculation Report will show "not found" for the Date of Birth.
 
2.  On the Personal tab, enter the Date of Death. The Deceased? checkbox will automatically be checked. The Date of Death governs the start of the 10-Year payout period, which commences on January 1 of the year after the Participant's death.
 
 
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Create a Contact Record for the Primary Beneficiary

1.  Enter the name of the Primary Beneficiary as a Contact, including the Birth Date.
 
 
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Create a Client Record for the Primary Beneficiary

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Open a new Investment Account for the Primary or Successor Beneficiary

 
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Set up the Primary or Successor Beneficiary in ProTracker Advantage

1.  If the Successor Beneficiary is not already in Advantage as a Contact, enter the name of the Successor Beneficiary as a Contact. Enter the Contact’s Birth Date. The Birth Date is not required for calculational purposes but is helpful to track multi-generational Contacts. If no Birth Date is present in Advantage, the RMD Calculation Report will show "not found" for the Date of Birth.
 
2.  If the Successor Beneficiary is not already in Advantage as a Client, create a Client record for the Successor Beneficiary who is receiving the money.
 
3.  Navigate to the Successor Beneficiary Client Profile who is receiving the money.
 
4.  On the Account Details screen, in the Account Flags panel:
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Step 1. Calculate RMD For
Information required in Steps 2-7 depends on the selection in Step 1.  
 
 
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Set up the RMD Calculator for the Successor Beneficiary

1.  In the Assistant panel, double-click on Calculate RMD.
 
2.  On the RMD Calculator screen:
Step 1. Select the Successor Beneficiary option.
    
Step 2. Select the name of the Primary Beneficiary, which may be the Participant, a Previous Designated Beneficiary, or a previous Eligible Designated Beneficiary. Confirm that the Date of Birth and Date of Death are correct for the Primary Beneficiary. The Date of Death shown in Step 2 starts the clock on the 10-year period.
 
Note: The name of the Primary Beneficiary stays the same for all Successor Beneficiaries, regardless of how many Successor Beneficiaries there are. The Primary Beneficiary's Date of Death establishes the beginning of the 10-year period.
 
Step 3. Select the Plan Type, usually "IRA." All of the Plan Types fall under the same rules.
 
Step 4. Check the checkbox if the Participant was enrolled in a collective bargaining plan, a state or local government 403(b) plan or 457 plan, or in the Federal Thrift Savings Plan. Under the SECURE Act, if any of these checkboxes are checked, there is a two-year delay in applying the 2020 Rules. For these beneficiaries, the effective date of the SECURE Act is postponed until January 1, 2022.
 
Step 5. Select the name of the Successor Beneficiary.
 
 In the Received From pick list, select Primary Beneficiary.
 
 Place a checkmark in the 10-Year Rule Exception checkbox, if applicable.
 
Step 6. Enter the year-end Account Value (as of the prior year-end date).
 
 Enter the Valuation Date (prior year-end date: 12/31/YYYY).
 
Step 7. Click the Calculate RMD button.
 
 Click on the View RMD Calculation button to see the report.
 
The RMD Calculator Screen and the RMD Calculation Report will look similar to the following images:
 
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RMD Calculator Screen

 
 
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RMD Calculator Report

 
 
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Scenario 6B:  Successor Beneficiary Died.
 

Create a Contact Record for the Primary Beneficiary

1.  Enter the name of the Primary Beneficiary as a Contact, including the Birth Date. The Birth Date is not required for calculational purposes but is helpful to track multi-generational Contacts. If no Birth Date is present in Advantage, the RMD Calculation Report will show "not found" for the Date of Birth.
 
2.  On the Personal tab, enter the Date of Death. The Deceased? checkbox will automatically be checked. The Date of Death governs the start of the 10-Year payout period, which commences on January 1 of the year after the Participant's death.
 
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Create a Contact Record for the Successor Beneficiary

1.  Enter the name of the Successor Beneficiary as a Contact, including the Birth Date. The Birth Date is not required for calculational purposes but is helpful to track multi-generational Contacts. If no Birth Date is present in Advantage, the RMD Calculation Report will show "not found" for the Date of Birth.
 
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Create a Client Record for the Successor Beneficiary

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Create an Investment Account for the Successor Beneficiary

 
5.  On the Account Details screen, in the Account Flags panel:
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Step 1. Calculate RMD For
Information required in Steps 2-7 depends on the selection in Step 1.  
 
 
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Set up the RMD Calculator for the Successor Beneficiary

1.  In the Assistant panel, double-click on Calculate RMD.
 
2.  On the RMD Calculator screen:
 
Step 1. Select the Successor Beneficiary option.
    
Step 2. Select the name of the Primary Beneficiary, which may be the Participant, a Previous Designated Beneficiary, or a previous Eligible Designated Beneficiary. Confirm that the Date of Birth and Date of Death are correct for the Primary Beneficiary. The Date of Death shown in Step 2 starts the clock on the 10-year period.
 
Note: The name of the Primary Beneficiary stays the same for all Successor Beneficiaries, regardless of how many Successor Beneficiaries there are. The Primary Beneficiary's Date of Death establishes the beginning of the 10-year period.
 
Step 3. Select the Plan Type, usually "IRA." All of the Plan Types fall under the same rules.
 
Step 4. Check the checkbox if the Participant was enrolled in a collective bargaining plan, a state or local government 403(b) plan or 457 plan, or in the Federal Thrift Savings Plan. Under the SECURE Act, if any of these checkboxes are checked, there is a two-year delay in applying the 2020 Rules. For these beneficiaries, the effective date of the SECURE Act is postponed until January 1, 2022.
 
Step 5. Select the name of the Successor Beneficiary.
 
 In the Received From pick list, select Primary Beneficiary.
 
 Place a checkmark in the 10-Year Rule Exception checkbox, if applicable.
 
Step 6. Enter the year-end Account Value (as of the prior year-end date).
 
 Enter the Valuation Date (prior year-end date: 12/31/YYYY).
 
Step 7. Click the Calculate RMD button.
 
 Click on the View RMD Calculation button to see the report.
 
The RMD Calculator Screen and the RMD Calculation Report will look similar to the following images:
 
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RMD Calculator Screen

 
 
 
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RMD Calculator Report

 
 
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RMD Wizard
After setting up an RMD for the above situations, the Advantage RMD Wizard will calculate future RMDs without requiring further setup.
 
Further RMD calculations for this account will be calculated automatically by the RMD Wizard each year. 
 
To see the RMD Wizard, click on Operations > Accounts > RMD. In the Assistant panel, click on RMD Wizard.
 
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RMD Calculation Assistance
ProTracker Software provides limited RMD calculation assistance. Print the RMD Scenario Fact Set form and email it as an attachment to: sales@protracker.com.
 
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RMD Resources
 
RMD Client Overview (includes index of RMD Help Articles)
 
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