IRA Acronyms

Monday, September 23, 2024

By Andy Ives, CFP®, AIF®
IRA Analyst

When presenting a particular section of Ed Slott and Company’s 2-Day IRA Workshop, Instant IRA Success training manual, I usually make the joke that, “If we were playing an acronym drinking game, we would all be on our way to a hangover.” The segment is titled: “Missed Stretch IRA RMD by an EDB, When the IRA Owner Dies Before the RBD.” This part of the manual discusses the automatic waiver of the missed RMD penalty in a certain situation, and the acronym soup is borderline comical. So that everyone knows which end is up, here is a spiked punch bowl of common retirement-account-related acronyms.

IRA: Individual retirement arrangement. (Not “account!”)

RMD: Required minimum distribution. Minimum amount that must be withdrawn from a retirement account each year after reaching a certain age.

RBD: Required beginning date (for starting RMDs). Generally, April 1 of the year after the year a person turns age 73.

QLAC: Qualifying longevity annuity contract. An annuity whose value (up to $200,000) can be excluded from an IRA owner’s balance for RMD calculation purposes.

EDB: Eligible designated beneficiary. Category of beneficiary who may take stretch RMDs.

NEDB: Non-eligible designated beneficiary. Category of beneficiary who gets the 10-year rule.

NDB: Non-designated beneficiary. Category of beneficiary that includes “non-people,” like an estate or charity. Payout rules applicable to NEDBs are the 5-year rule or “ghost rule.”

ALAR: At least as rapidly. The rule dictating that when RMDs have begun, they must be continued by the beneficiary. ALAR is a function of frequency, not amount.

QCD: Qualified charitable distribution. A distribution from an IRA to a qualified charity, subject to an age requirement of 70½ or older.

CWA: Contemporaneous written acknowledgement. This is just a receipt for your QCD!

CGA: Charitable gift annuity. A one-time QCD of $53,000 (for 2024) can go to an entity like a CGA, charitable remainder annuity trust (CRAT), or charitable remainder unitrust (CRUT).

DAF: Donor advised fund. A QCD cannot be made to a DAF.

NUA: Net unrealized appreciation. Tax strategy used to pay long-term capital gains on the appreciation of company stock. (Be sure to know all the NUA rules before proceeding.)

NIA: Net income attributable. The gain or loss on an excess IRA contribution.

QDRO: Qualified domestic relations order. Used to split a retirement plan after divorce.

SECURE Act: Setting Every Community Up for Retirement Enhancement Act.

I feel dizzy. Maybe I should go lie down and sleep it off.

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