Publication 575 - Pension And Annuity Income - 2004 Page 30
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36follows the calendar year in which you reach age 70
/
. This
The terms of the plan determine which of these two rules
1
2
rule does not apply if your retirement plan is a government
applies. If the plan permits the employee or the beneficiary
or church plan.
to choose the rule that applies, this choice must be made
You are a 5% owner if, for the plan year ending in the
by the earliest date a distribution would be required under
calendar year in which you reach age 70
1
/
, you own (or are
either of the rules. Generally, this date is December 31 of
2
considered to own under section 318 of the Internal Reve-
the year following the year of the employee’s death.
nue Code) more than 5% of the outstanding stock (or more
If the employee or the beneficiary did not choose either
than 5% of the total voting power of all stock) of the
rule and the plan does not specify the one that applies,
employer, or more than 5% of the capital or profits interest
distribution must be made under Rule 2 if the employee
in the employer.
has a designated beneficiary and under Rule 1 if the
employee does not have a designated beneficiary.
Age 70
1
/
. You reach age 70
1
/
on the date that is 6
2
2
Distributions under Rule 2 generally must begin by
calendar months after the date of your 70th birthday. For
December 31 of the year following the year of the
example, if your 70th birthday was on June 30, 2004, you
employee’s death. However, if the surviving spouse is the
reached age 70
1
/
on December 30, 2004. If your 70th
2
beneficiary, distributions need not begin until December 31
birthday was on July 1, 2004, you reached age 70
1
/
on
2
of the year the employee would have reached age 70
/
, if
1
2
January 1, 2005.
later.
If the surviving spouse is the designated beneficiary and
Required distributions. By the required beginning date,
distributions are to be made under Rule 2, a special rule
you must either:
applies if the spouse dies after the employee but before
•
Receive your entire interest in the plan (for a
distributions are required to begin. In this case, distribu-
tax-sheltered annuity, your entire benefit accruing
tions may be made to the spouse’s beneficiary under either
after 1986), or
Rule 1 or Rule 2, as though the beneficiary were the
•
employee’s beneficiary and the employee died on the
Begin receiving periodic distributions in annual
spouse’s date of death. However, if the surviving spouse
amounts calculated to distribute your entire interest
remarries after the employee’s death and the new spouse
(for a tax-sheltered annuity, your entire benefit ac-
is designated as the spouse’s beneficiary, this special rule
cruing after 1986) over your life or life expectancy or
applicable to surviving spouses does not apply to the new
over the joint lives or joint life expectancies of you
spouse.
and a designated beneficiary (or over a shorter pe-
riod).
Minimum distributions from an annuity plan. Special
rules may apply if you receive distributions from your
After the starting year for periodic distributions, you must
retirement plan in the form of an annuity. Your plan admin-
receive at least the minimum required distribution for each
istrator should be able to give you information about these
year by December 31 of that year. (The starting year is the
rules.
year in which you reach age 70
/
or retire, whichever
1
2
Minimum distributions from an individual account
applies in determining your required beginning date.) If no
plan. Your plan administrator should be able to give you
distribution is made in your starting year, the minimum
information about how the amount of your required distri-
required distributions for 2 years must be made the follow-
bution was figured.
ing year (one by April 1 and one by December 31).
If there is an account balance to be distributed from your
plan (not as an annuity), your plan administrator must
Example. You retired under a qualified employee plan
figure the minimum amount that must be distributed from
in 2003. You reached age 70
1
/
on August 20, 2004. For
2
the plan each year.
2004 (your starting year), you must receive a minimum
amount from your retirement plan by April 1, 2005. You
What types of installments are allowed? The mini-
must receive the minimum required distribution for 2005 by
mum amount that must be distributed for any year may be
December 31, 2005.
made in a series of installments (for example, monthly or
quarterly) as long as the total payments for the year made
Distributions after the employee’s death. If the em-
by the date required are not less than the minimum amount
ployee was receiving periodic distributions before his or
required for the year.
her death, any payments not made as of the time of death
must be distributed at least as rapidly as under the distribu-
More than minimum. Your plan can distribute more in
tion method being used at the date of death.
any year than the minimum amount required for that year
If the employee dies before the required beginning date,
but, if it does, you will not receive credit for the additional
the entire account must be distributed under one of the
amount in determining the minimum amount required for
following rules.
future years. However, any amount distributed in your
•
starting year will be credited toward the amount required to
Rule 1. The distribution must be completed by De-
be distributed by April 1 of the following year.
cember 31 of the fifth year following the year of the
employee’s death.
Combining multiple accounts to satisfy the minimum
•
Rule 2. The distribution must be made in annual
distribution requirements. Generally, the required mini-
amounts over the life or life expectancy of the desig-
mum distribution must be figured separately for each ac-
nated beneficiary.
count. Each qualified employee retirement plan and
Page 30
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