Required Minimum Distribution Account Balance (Non-calendar Year Plans

[Guest wolfman]

Minimum Distributions are calculated based on the account balance as of the latest valuation date in the prior year (the latest valuation ending in the calendar year prior to the distribution calendar year). There are adjustments to this balance where the plan year is not calendar and there is no 12/31 valuation. My interpretation is that you add any contributions allocated after the plan year end but within the calendar year end. This would include contributions allocated for the plan year ended AND contributions for the next plan year allocated within the calendar year. For example, a 401(k) plan with a plan year ending 8/31 and semi-annual valuations. My understanding is the 8/31 balance would be increased by any year-end allocations for that plan year (even if made after the calendar year ends) AND by contributions allocated from 9/1 - 12/31 for the next plan year. This adjusted 12/31 value would aslo be adjusted by distributions made from 9/1-12/31.

Agree, disagree? Thanks

[John A]

I basically agree. However:

The regulation does not say that contributions attributable to a given calendar year are included in the account balance for minimum distribution purposes; rather, contributions are included only if they are allocated as of a date within the calendar year.

I think it is possible to interpret this as meaning that in a daily-valued plan on a cash basis, the account balance on 12/31 could be used with no adjustments. In a "traditional" DC plan on an allocation basis, the account balance would be adjusted for contributions after 12/31 that were allocated on or before 12/31.

[Guest wolfman]

Thanks. My main concern was to verify that for non-calendar year end valuations, you would adjust for contributions allocated after the last valuation date but within the calendar year (even though the contributions may actually be for the new plan year starting within the calendar year). It's hard not to be wordy with this stuff!