Select the type of plan on the main input screen. The software classifies retirement plans into three groups:
- Normal: This is the most common selection if the plan owner is retiring on or before age 72 (if owner born on or before 6/30/1949, then age is 70½), and the plan is not a Roth IRA. Use it for IRAs, 401(k)s, and Roth 401(k)s that are not rolled into Roth IRAs.
- Inherited IRA: As above, with some death and beneficiary information preset.
- Roth IRA: Select Roth IRA both for Roth IRAs and for Roth 401(k)s that will be rolled into a Roth IRA at the owner’s death.
The Roth IRA was created by the Taxpayer Relief Act of 1997. There are no required distributions until the year after the plan owner dies. The required beginning date of minimum distributions from a Roth IRA is the year after the owner’s death. At that point, the minimum distributions are calculated based on the beneficiary’s single life expectancy.
If the beneficiary is the Roth IRA owner’s spouse, the election to recalculate the beneficiary’s single life expectancy each year after the required beginning date is available. For non-spousal beneficiaries, the life expectancy is calculated once and reduced by one for each year after the required beginning date.
If the type of plan is a Roth IRA, the program assumes that the owner dies. Click the Beneficiary Info & Dates of Death button to indicate the years of death.
Inherited Roth IRA
As above, with some death and beneficiary information preset.
<5% Owner
Use this selection if the owner is planning to retire after age 72 (or if owner is born on or before 6/30/1949 age 70½) and owns no more than 5% of a company with a pension plan that is not an IRA. If the plan owner owns no more than 5% of a company with a pension plan that is not an IRA, the required minimum distributions are delayed until the retirement year. If the plan is a <5% Owner plan, the Year of First Required Distrib box changes to the Retirement Year box. Enter the date of your client’s first required distribution in the Retirement Year box.
