If a participant has a trust as bene of his plan account, and part of the trust is a QTIP trust, and the trust says "income" must be paid to the spouse...let's further assume that the plan account is the only asset of the trust...how is "income" determined and how do RMDs come into play?

Let's further assume that the plan uses a pooled account, so there is no reasonable way to look through to the underlying assets. The participant (or bene) receives a statement once a year showing beginning balance, gains or losses, contributions (there shouldn't be any!) and distributions.

If the account has gains of $20,000, and the RMD is $5,000, what does that mean in terms of the amount that must be paid to the spouse from the trust?

Conversely, if the plan has a loss of $20,000, and the RMD is $5,000, what does that mean?

I'm looking at a book by Noel C. Ice, who I just noticed is the moderator of this forum (!), and I think it says that annuity payments are considered income. I don't see anythinbg that says RMDs are treated as annuity payments for this purpose.

From what I understand, income would be gains on the investments (dividends and interest) and the payment to the spouse must the greater of the income or the RMD or the year

I think that they are talking about trust accounting income and that is usually prescribed by state trust law.

Thanks. I also talked to an accountant who is familiar with this stuff and he agreed; that is, trust income is generally dividends and interest, although cap gains might be included as permitted by state law and/or the trustee's discretion.

So, it seems that the plan administator would have to provide a breakdown of the gain/loss.