By Andy Ives, CFP®, AIF®
IRA Analyst
When presenting a particular section of our 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 Minimum amount that must be withdrawn from a retirement account each year after reaching a certain age.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 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 70 ½ 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, CRAT (charitable remainder annuity trust), or CRUT (charitable remainder unitrust).
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.