Answer:
If they separate the decedent's IRA into three pay out accounts (one for each beneficiary) prior to September 30 of next year, they can each take a pay out based on their individual life expectancy and their first RMD is due in 2003. (I am assuming your customer withdrew this year's RMD prior to death.)
For example, next year the girlfriend will be 62. The new tables indicate her life expectancy at that time is 23.5 years. Divide the 12/31/02 balance in her account by 23.5 and that is her RMD for 2003. For 2004, you will divide the 12/31/03 balance in her account by 22.5. Repeat the process for the children individually.
The new regulations are much simpler, it is reasonably accurate to say the beneficiary's only "option" is to take more than the RMD.
First published on BankersOnline.com 9/16/02
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