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Filing for excise tax refief for missed RMD (through VCP) and struggling to correcting answer this: At least one affected participant is either an owner-employee (see IRC Section 410(c)(3)) or, if the plan sponsor is a corporation, a 10 percent owner of such corporation." Plan sponsor is a partnership. Some partners are professional corporations. Affected participant is the 100% owner of her P.C., which is less than a 10% partner of the partnership sponsoring the plan. For 401(a)(9), she is a 5% owner because Section 416 is cross referenced for that determination and those rules apply ownership test separately for members of the affiliated service group. But it isn't clear to me whether the VCP form question is intended to refer to the partnership that sponsors the plan or would include owners of the P.C.s that are members of the affiliated service group (and related participating employers in the plan). I'm not seeing an answer in either the form or the definition in 401(c)(3). There is no reference to 416 so I am inclined to apply the ownership test only at the partnership level. Can you offer any insights?

I have heard two opposing opinions. When calculating an RMD, is the accrued contribution added to the 12/31 of the previous year's account value?

We have an HCE (>5% owner) who is now in RMD payout status, i.e. 70 1/2 and said HCE asked if we can count the ADP refunds already paid in 2017 to offset (reduce) the RMD amount (total distribution) now payable. Is this permissible? And any IRS produced documentation would be much appreciated. Thanks!

A DB participant terminates employment before RBD and dies at least 15 years before first RMD is due. Surviving spouse does not answer correspondence for years and is not found until well after RMD date, more or less ten years (facts are a little murky as to how often plan administrator reached out to surviving spouse - spouse has been living both in and out of US for years, but there have been numerous attempts - although first one may have been several years after first RMD was due). Surviving spouse never made election regarding form of benefit. 1) I believe surviving spouse should receive first payment that represents actuarial equivalent of missing RMDs. Anyone disagree? 2) Q&A 4 of CFR 1.401(a)(9) says that when participant is deceased, and a spouse fails to consent to a distribution, the plan may distribute in the form of a QPSA and 411(a)(11) and 417(e) will be deemed satisfied if plan has made reasonable efforts to obtain consent and the distribution otherwise meets the requirements of 417. Is there any reason that spouse should be given opportunity to choose another form of benefit? It may be that plan administrator's first attempt to reach spouse was late, but there were many attempts afterward. Spouse's son has responded to plan administrator's queries from time to time so plan administrator knows that documents went to right house. Thank you

Working on a single employer DB plan. For a participant receiving an RMD (monthly annuity) while continuing to work, I have a question with regards to offsetting benefit distributions against continued accruals. Citing 1988 Proposed Regulation 1.411(b)-2 as the latest (and only) governing code/regulations I could dig up. Section (b)(4)(ii) allows for offsetting continued benefit accruals by prior benefit disbursements, meeting certain criteria. One of these criteria is that the benefit payments could have been suspendible (w/o regard to 401(a)(9)) with regards to 203(a)(3)(B) of ERISA (Suspension of Benefits rules). Does this mean that I can't offset future accruals by any distributions made for a month in which the participant worked less than 40 hours (because those payments can't be suspended - did not have 203(a)(3)(B) service for that distribution period)? If you are allowed to offset all actual distributions, then what is this section of the regulation referring to. Also, I assume that if the plan doesn't typically suspend payments (or at least doesn't suspend them as stringently as they could), that this isn't an issue. What matters is whether the regulations would allow them to suspend, not whether they actually suspended? The obvious scenario being when someone is impacted by 401(a)(9), but this plan does have SOB rules in place, but they only do it when the participant works at a rate that is greater than the 203(a)(3)(B) service definition. It may not seem to be a common issue anymore, since in-service RMDs are only required for 5% owners since the SBJPA changes, and those participants are likely to be working more than 40 hours a month. However, I'm working on a remediation project which includes many pre-SBJPA RMDs, as well participants that commenced in-service prior to SBJPA, and the in-service payments were elected to continue. With In-Service retirements after PPA, this issue may have gained additional scrutiny, but I haven't been able to locate any more recent legal guidance. One last question: Another set of plans I'll be addressing allows for benefits to grow even after they've transferred out of the prior plan. This occurs even if the transfer is outside the Controlled-Group. When someone transfers from CG(1) to CG(2), they are treated like a termination in CG(1) plan (this is not in question by the employer's legal counsel - and I agree with this). So for RMD purposes, they must commence benefits under CG(1) plan even though they are still actively working for the employer. The CG(1) benefit can, and often does, increase after "termination". So, in a nut shell, it behaves like an in-service RMD under CG(1)'s plan. Referring to the question above regarding offsets for benefit payments, it appears that all benefit distributions are not suspendible under CG(1) plan, and thus, there will need to be an increase in the CG(1) plan benefit that is being paid? Sorry for the long set of questions, but I haven't been able to locate a single citation (legally binding, or otherwise) that addresses this specific issue. All the examples in regulations/industry publications seem to either gloss over the "suspendible" issue with the distributions, or I'm off-base with my interpretation.

Shareholder X of a corporation which sponsors an ESOP owns 4.8% of the NUMBER of outstanding shares of the company. This 4.8% is based on his non-esop shares only, and the total outstanding shares includes the ESOP shares (all outstanding company stock). Shareholder X is turning age 70-1/2, so determining his ownership % is important. If he is a >5% shareholder, he must take a substantial RMD for 2016 and all future years. If he is not a >5% shareholder, he does not have to take RMDs until he retires. Reg 1.416-1 T-17 says a 5% owner is any employee who owns (or is considered as owning within the meaning of 318) more than 5 percent of the VALUE of the outstanding stock of the corporation . . . To determine whether shareholder X is a >5% owner, can I do a pure number of shares owned over number of shares issued calculation, or do I need to know an appraised dollar value of shares for each of the other shareholders? In other words, the stock valuation for the ESOP may say ESOP shares are worth $10, but another owner may have a different per share value based on his specific discounts applied, depending on minority/majority and deemed marketability. If some shareholders' stock is worth say $8.00, then the math could work out that shareholder X owns more than 5% of the VALUE of all shares. Assume voting rights are equal for all shares. Which way does the 5% determination need to be made - number of shares or dollar values - and has anyone heard of the non-esop shares being valued for a purpose like this? Thanks.

In a plan that we have recently took over, we have discovered a participant (born in 1937) died in 2005 and was not paid out by the 5th year (2010) and still has an account balance. In addition there is no beneficiary on file. Any suggestions on how to correct this? Can someone point me in the right direction? Thank you!

Participant is 70 1/2 and in 2016 took an in-service 6 figure distribution that rolled to an IRA. Account balance was $0.00. Participant continued working and contributed a few thousand dollars and then terminated all in 2016. Participant now wants remainder of money to put into IRA. Does the remaining funds need to entirely be paid as a RMD to partially satisfy RMD based on 12/31/15 or can this be rolled over and entire RMD handled from IRA? Participant is aware that additional funds need to be taken from IRA to satisfy minimum based on 12/31/15.

Facts: 1. Plan year end is 4/30/2017 2.Owner A signed a 242(b) election to delay his RMDs - the 242(b) indicates distributions should commence within 60 days after the last day of the plan year in which he retires 3. Owner A dies in July of 2016 at age 82. 4. Owner has 5 non spousal beneficiaries Questions: 1. When does the distribution need to occur by? Is it June 30, 2017, as per the 242(b) election (60 days after end of plan year)? 2. How much needs to be distributed? Is there catch-up distribution required? The rules are confusing but it seems like you only need to catch-up the contributions is the 242(b) is revoked or modified - this 242 was never revoked or modified. 3. Since there are 5 beneficiaries of differing ages ranging from 30-50 years old, how is the first distribution calculated? (they plan on spitting the account up after the first distribution).

I have a new plan, started by a 75 year old owner, in 2014. He had no account balance as of 12/31/2013, and a $2,000 account balance as of 12/31/2014. He is required to take an RMD for 2015, but can he postpone the first RMD to April 1, 2016, even though he is 76 years old in 2015 and not 70-1/2?

DB plan allows for bifurcated distributions, i.e., a partial lump sum with the remainder as an annuity. How do you calculate the RMD for such a distribution? Participant has reached required beginning date and wants to roll over as much of the lump sum as possible--but any portion that is attributable to the RMD isn't eligible for rollover. The RMD regs tell you how to calculate the RMD for an annuity or a total lump sum, but not a bifurcated distribution. Cheers.

My client has found several participants who were previously considered “lost”. Each of these participants is well past age 70 ½ and each has not taken an RMD. In accordance with the terms of the plan, some of these lost participants’ benefits were forfeited. My client has asked whether this defined benefit plan must pay these newly found participants a benefit that is actuarially adjusted for the period beyond age 70 ½. In some cases the initial benefit was around $100/mo and now with the actuarial adjustments, the benefit will be a lump sum of over $500,000 (the plan is terminating). In some situations the participant is dead, and the surviving spouse or beneficiaries will receive the benefit. In each case, the participant was searched for and determined “lost” when the participant reached age 70 ½. The client's actuary is suggesting that the benefit should only be adjusted to age 70 ½. Has anyone else encountered a similar situation? It is my understanding that the participant must receive 100% of the actuarially adjusted benefit to the current date (not age 70 ½).

Employee is 72. His last day at work was 12/31/14 and he worked a full day. He did not go back to work in 2015. What is the "calendar year in which the employee retires from employment"? 2014 or 2015? I don't find any support anywhere, but I would contend that in 2014 he was still working. In 2015 he was retired, making his required beginning date 4/1/16. Thoughts? Support?

Withdrawn.

New plan for me and the father of one of the owners was born in 1940. Since the son's ownership is attributed to father, I am assuming he needs an RMD for 2014 (calendar year plan). I just got back from Hawaii, so my brain isn't firing on work mode yet...

Does anyone have a suggestion for an expert witness regarding a minimum distribution under 401(a)(9) from a DB plan? On party says 401(a)(9) would be violated if the amount argued by the other party is actually paid.

I reach age 70 1/2 this year. I have four Individual Retirement Accounts, two of which contain Individual Retirement Annuities and nothing else. The annuities have not been annuitized. I don’t plan to annuitize them for a couple of decades. Can I add up the Required Minimum Distribution (RMD) from these and take the total from one of the Individual Retirement Accounts not containing an annuity and by doing so satisfy my RMD for all of the accounts and annuities? Does the fact that the annuities are in Individual Retirement Accounts make a difference?

Is there anything in the way a 1099-R for an RMD is completed that would clue the IRS and/or the participant that the distribution was in fact an RMD, and thus not eligible for rollover? Any help appreciated.

Is a RMD required to be processed before a rollover out of the plan is processed? e.g. Participant DOB is 11/1942 Retired on 04/2013 Sent in paperwork to roll to an IRA in 08/2013 I realize that the RMD can be delayed until April 1, 2014 to take the 2013 RMD and then the 2014 must be taken before 12/31/2014. The question is do we have to process a mandatory RMD before the request for rollover is processed? And does it matter if the plan is a 403b vs a 401k? The plan doc does allow for the later of 70.5 or retirement.

ABC, Inc. sponsors a money purchase plan. A participant terminated years ago at age 61. At age 70½, he began being paid just the minimum required by §401(a)(9). Now at age 82, he dies. His spouse (age 66) is the sole beneficiary of his remaining account balance. How long before the plan (to remain qualified) must require her to take her benefits out?