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If you decide I have it wrong because of the nature of the trust let me know. I dislike trusts for payments as they make things too complex. And I for one agree RMD rules are too complex. For one thing it is taking a sledge hammer to kill a gnat. I get the government didn't' want large balances to be taxed at some point but they have made a set of rules that effect all balance sizes that are some of the easiest to get wrong.

I agree completely, but I also see some questions that have me thinking "seriously"? i know not everyone on here is a benefit professional but I am also a firm believer that if you research your own question and find the answer that you remember/learn more rather than simply asking someone else, again and again. Although some of the crazy issues/questions that come up here are very entertaining, so are these non-benefit crazy discussions - keep 'em coming!

In this link from "DWC - the 401(k) experts" they spell out what I believe is the standard industry interpretation and what I believe has been explained by the IRS informally, for this exact situation. I'm not citing them as the ultimate authority but they didn't make it up either; this has been repeated many, many times and I didn't think there was really any debate about it. My emphasis in bold. Profit Sharing Allocation Methods From time-to-time, a plan sponsor may wish to change the method used to allocate profit sharing contributions — maybe from salary proportional to new comparability. This is one of those situations in which the anti-cutback rule described above must be applied on a theoretical basis to determine when a change can occur. The reason is that participants are considered to have earned the right to share in a profit sharing contribution allocated under the existing plan-specified method once they have satisfied all of the plan’s allocation requirements. This is true even when the profit sharing is discretionary and the employer is not required to make any contribution at all. Consider these two variations on the theme: A plan that requires participants to be employed on the last day of the plan year to receive a contribution has until December 30th (assuming a calendar year plan) to amend the allocation method. A plan that requires participants to either be employed on the last day of the year or complete at least 501 hours of service can only change the allocation method up until the date on which the first participant works his/her 501st hour for the year. At that point, changing the method would eliminate a right the participant has already earned. Plans that do not impose any additional requirements on the profit sharing contribution cannot change the allocation method once the year starts. See IRS Technical Advice Memorandum 9735001 for additional information.

Sorry Bill, I never intended to give the impression of being upset. No emotional layer at all. I just like a good discussion and I despise badly written regulations. I learned to fly for fun and the mentality of pilots at the airport is completely different. They will pick apart the regulations context and verse to the most infinite degree because that is how the FAA enforces. IRS says "we know what we wrote, but here is what we meant".. Of course going to bat against the FAA might get a license suspended for a few month whereas the DOL or IRS will just take your nest egg.

I'm always amazed (and I don't know why) at people coming to this board with "questions" and getting upset at the answers. If you're so confident in your position, why come here?

Hie thee to a labor lawyer for a better understanding of how things work. Who said? The OP. Read it again. Camel's nose under the tent and all that jazz.