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PAGE 8A
- FORSYTH county NEWS Sunday, March 28,2004
Facts to know when you inherit a non-spousal IRA
For individuals inheriting a
non-spouse’s IRA, there are
many planning and distribution
considerations. It is imperative
that you have a clear under
standing of your options and
have established a plan before
cashing out your inherited plan.
The first step is understand
ing the options available to you
for your inheritance:
IRA owner dies before the
required beginning date:
• inherited IRA Take dis
tribution by Dec. 31 of the year
following the IRA owner’s
years of death using Single Life
Table (Term Certain) based on
beneficiary’s age or; if the bene
ficiary is older than the
deceased IRA owner, distribu
tion may be based on the
deceased IRA owner’s age.
That life expectancy will then
be reduced by one in each sub
sequent year.
• Five-Year Rule Deplete
the IRA during a five-year peri
od that begins on Dec. 31 fol
lowing the death of the IRA
owner. The entire account must
be distributed by the end of the
fifth year.
• Lump Sum Distribution
• Use Disclaimer Dis
claim (refuse) all or a portion of
IRA assets.
IRA owner dies after the
required beginning date
• Inherited IRA Take dis
tribution by Dec. 31 of the year
following the IRA owner's year
of death using Single Life Table
(Tenn Certain) based on benefi
ciary's age or; if the beneficiary
is older than the deceased IRA
owner, distribution may be
based on the deceased IRA
owner's age. That life expectan
cy will then be reduced by one
in each subsequent year.
• Lump Sum Distribution
• Use Disclaimer Dis
claim (refuse) all or a portion of
IRA assets.
If you decide to keep your
inherited IRA, the IRA
Custodian must keep the IRA
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BUSINESS & INDUSTRY
STOCK MARKET UPDA'I E
market in brief Stocks of local interest
At the close ot sign Stock Last Change
March 26,2004 ATG AGL Resources 28.06 -0.04
BLS BellSouth Corp. 26.74 +0.03
DOW -5.85 DELL Dell Computer 33.39 -0.43
DAL Delta Air Lines 7.67 +O.IB
F Ford Motor Company 13.28 +O.IO
Volume: Qp Georgia Pacific 32.28 -0.01
GM General Motors 45.77 +0.16
HMM HD Home Depot 36.93 -0.22
INTC Intel Corp. 27.38 -0.41
KO Coca-Cola Company 48.78 +0.02
MCD McDonalds Corp. 27.87 -0.58
csocnn .17BR MSFT Microsoft 24.96 -0.22
S&P 500 +17.86 pEp Pepsicolnc . 5106 <)l6
RF Regions Financial 35.94 -0.14
Volume: SFA Scientific Atlanta 31.69 -0.07
1.109.19 SGMS Scientific Games 18.74 -0.18
■MNEk SO Southern Company 30.39 +0.24
||gKgMl| T AT&T 19.99 +0.17
TSN Tyson Foods 18.07 -0.06
UPS United Parcel Service 69.07 -0.46
WB Wachovia Corp. 46.00 -0.21
NASDAQ -7.20 WMT Wal-Mart Stores Inc 59.41 -0.41
Volume John Ma Weaver
1,960.19 Senior Vice President, Investment Officer
21 c D mX e cA’' Wachovia
(678)455-0016 SECURITIES
titled as an "Inherited" or
"Decedent" IRA. The wording
on the account may vary, but
the important thing is that the
account clearly shows that it is
for the benefit of the benefici
ary, but is not the beneficiary’s
IRA The name of the deceased
participant should appear with
indication that the beneficiary
controls the account.
If there are multiple benefi
ciaries and their shares are frac
tional. they may be best served
by establishing separate
accounts, so that each benefici-
ary can select his/her own
investments and use his/her own
age to compute required mini
mum distributions.
The division of the
deceased's account into sepa
rate inherited IRA is considered
a plan-to-plan transfer and is
not a taxable event.
Once you have established
your inherited IRA. you will
want to designate your own
“successor" beneficiary. If you
die before withdrawing all of
the assets in the IRA, the suc
cessor can step into your shoes
and take distributions over the
balance of your life expectancy.
Your successor beneficiary
should be named as soon as
possible, after you inherit the
IRA, as part of a complete
estate plan.
Under IRS regulations,
effective Jan. I. 2002. individu
als will have substantially
increased opportunities to defer
income tax on their inherited
IRAs.
Beneficiaries of inherited
IRAs may use the new rules
starting with required minimum
distributions based on the Dec.
31, 2001, account balance.
Beneficiaries taking distribu
tions from an inherited qualified
retirement plan [4Ol (kX 403(b),
etc.|, as opposed to an inherited
IRA, must wait until the plan is
amended before being able to
use the new rules.
Single Life Expectancy
Thble
One of the options available
to individuals inheriting a non
spouse’s IRA is to take distribu
tions from the IRA over their
life expectancy based on the
IRS Single Life Expectancy
Table. Keep in mind that this
option requires the first distribu
tion to be taken no later than
Dec. 31 of the year following
the deceased IRA owner’s year
of death. Subsequent minimum
distributions must be taken each
year thereafter on a single life
term certain basis.
Formula: Year-end value for
year immediately preceding
current year divided by single
life table divisor for attained age
in year following IRA owner's
year of death minus one for
each subsequent year including
the current year equals required
minimum distribution.
Calculating the required
minimum distribution for year
2004
Example 1— IRA owner
dies in year 2003:
Ed dies in year 2003. The
beneficiary of his IRA is John,
his son. Ed’s IRA is re-titled as
an Inherited IRA with John as
beneficiary. On Dec. 31, 2003,
the IRA account value is
SIOO,OOO. John's attained age in
year 2(X)4 w ill be 35. The single
life table shows a life expectan
cy of 48.5 years for a 35 year
old. To satisfy his minimum
required distribution for year
2004; John must withdraw at
least $2,062 from the IRA prior
to Dec. 31. 2004 (SIOO,OOO/
48.5 = $2,062).
Example 2 IRA Owner
Dies Prior to Year 2003:
Maxine dies in year 2001.
The beneficiary of the IRA is
Judy, her sister. Maxine’s IRA
is re-titled as an Inherited IRA
with Judy as beneficiary. Judy’s
attained age in year 2002 was
50. The single life table shows a
life expectancy of 34.2 for a 50
year old. In order to calculate
the required minimum distribu
tion for 2004, the life expectan
cy divisor for year 2002 must
be reduced by two to reflect the
subsequent years (2003 and
2004). Therefore, the life
expectancy divisor for year
2004 is 32.2. The IRA account
value on Dec. 31, 2003, is
$250,000. To satisfy her
required minimum distribution
for 2004, Judy must withdraw
at least $7,764 ($250,000/32.2)
prior to Dec. 31,2004.
On April 17. 2002, the
Treasury Department and the
IRS published a new Single
Life Expectancy Table, effective
Jan. 1, 2002. This table is to be
used for calculations for year
2002 and thereafter.
This column is produced by
the Financial Planning
Association, the membership
organization for the financial
planning community, and is
provided by John M. Weaver, Sr.
Vice President-Investment
Officer. Murphy Office Center,
210 Dahlonega St.. Suite 103-A,
Cumming, GA, with Wachovia
Securities. LLC, member NYSE
and SIPC, and a broker/dealer
member in good standing of the
FPA. Call John Weaver at 678-
455-0016.
Wachovia Securities does
not pmvide tax or legal advice.
Please consult witft your own
tax and legal advisors before
taking any action that would
have tax consequences.
Insurance products are avail
able through insurance sub
sidiaries of Wachovia
Corporation and other under
writers. Not available in all
states.