Question
Mary and Larry have been married for 40 years and have three children together. They are currently semi-retired and enjoying life at the beach in
- Mary and Larry have been married for 40 years and have three children together. They are currently semi-retired and enjoying life at the beach in Florida. Mary turned 70 on February 14th 2019 and Larry turned 70 on October 15th. Mary is fully retired from Burl's. Larry still works part-time for SetSail that sponsors a 401(k) plan, in which Larry continues to make contributions. Larry gave up his corporate job at IBM several years ago and plans to continue work part-time for SetSail. Larrys rich uncle Juan died earlier during 2019 and left his Roth IRA to Larry. Juan started the Roth IRA over ten years ago.
- They need to know whether they need to take minimum distribution and if so, how much and from what accounts. The balances in the accounts are shown below:
| Plan Owner | Plan # | Account/Plan Type | December 31, 2018 Balance | December 31, 2019 Balance | December 31, 2020 Balance | December 31, 2021 Balance |
| Mary | 1 | Self Directed IRA | $22,000 | $23,500 | $20,500 | $19,800 |
| Mary | 2 | Self Directed Roth IRA | $58,000 | $67,000 | $68,000 | $70,000 |
| Mary | 3 | Self Directed IRA | $45,000 | $51,300 | $50,300 | $49,100 |
| Mary | 4 | Burl's Money Purchase Pension Plan (MPPP) | $270,000 | $267,000 | $260,000 | $252,000 |
| Larry | 5 | Inherited Roth IRA | $180,000 | $200,000 | $220,000 | $218,000 |
| Larry | 6 | Self Directed IRA | $17,000 | $18,000 | $20,000 | $20,500 |
| Larry | 7 | IBM 401(k) Roth Account | $40,000 | $41,500 | $49,000 | $51,000 |
| Larry | 8 | IBM Money Purchase Pension Plan | $600,000 | $650,000 | $700,000 | $723,000 |
| Larry | 9 | SetSail 401(k) Roth Account | $80,000 | $89,000 | $92,000 | $99,000 |
What is the required beginning date for Mary and Larry?
What is the age factor for Mary and for Larry's first required minimum distribution (RMD) (use the tables in effect for 2020)?
Which plans must they take a distribution from during 2020 (without regard to the ability to delay a distribution)?
What is the total amount of Larry's RMD for 2021 ( the year he turns age 72)?
What is the minimum number of RMDs Mary has to take each year?
If Mary delays her first RMD to April 1st of 2020, how much is the total amount for jer RMDs for 2020?
How is the life expectancy factor for the inherited Roth IRA determined for 2021 compared to the life expectancy factor for Larry's other accounts?
Assume that Mary falls off the sailboat in 2020 and drowned. Also assume that she named her three children, ages 50, 48, and 45, as equal beneficiaries on her self-directed Roth IRA. What are the implications for the beneficiaries regarding minimum distributions?
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Fundamentals of Investments Valuation and Management
Authors: Bradford D. Jordan, Thomas W. Miller
5th edition
978-007728329, 9780073382357, 0077283295, 73382353, 978-0077283292
