MRDs as an annuity

[dmb]

A client has a Money Purchase Plan and the owner is over 70 1/2. His wife doesn't want to give spousal consent to waive the J&S. How is the MRD calculated without spousal consent when the J&S must be provided?? Thanks.

[david rigby]

In general, the plan should specify the mechanism for calculating any optional forms of payment.

[KJohnson]

This may not answer your question of "how" to calculate, but this is a good explanation from retirement plan distribuiton Q&As that were posted on benefitslink This is under the old proposed regs, but I don't believe that the QJSA analysis changes.

http://www.benefitslink.com/cgi-bin/qa.cgi...d=122&mode=read

Required minimum distributions and QJSAs

(Posted 8/19/99)

Question 122: In a defined contribution plan that is subject to the joint and survivor annuity requirements, must a required minimum distribution take the form of beginning a 50% joint and survivor annuity (absent spousal consent to a different form)? Or can the plan, without the consent of the participant or spouse, simply make yearly distributions calculated in accordance with the proposed regulations based on the life expectancy of the participant and any named beneficiary?

Answer: Proposed regulation 1.401(a)(9)-1, Q&A H-3, states that Code section 401(a)(9) minimum distribution requirements must be met in this circumstance. It goes on to say that the plan "may" distribute in the form of a qualified joint and survivor annuity "if the plan has made reasonable efforts to obtain consent from the participant (or the spouse if applicable)." This implies that the participant (and spouse) might be entitled at that time to alternative forms of distribution under the plan that might also satisfy Section 401(a)(9), such as the regularly calculated minimum distribution amount.

An interested reader has asked a follow-up question:

A follow up to Q&A 122. Although participants may be entitled to elect to take their MRD in a form other than a QJSA, if no election is received must the Plan make the MRD in the QJSA form because of 1.417(e)-1© which provides that "all benefits that the plan requires to begin must be in the form of a QJSA and QPSA unless the applicable written explanation, election and consent requirements of Section 417 are satisfied."?

I can find no exception to the requirement that benefits must be distributed in the form of a qualified joint and survivor annuity unless the participant and spouse consent to an alternate form, just because the participant has reached his required beginning date. The language of proposed regulation 1.401(a)(9)-1, Q&A H-3, implies this as well. I would conclude that the plan should require distribution in the form of a QJSA if the participant and spouse fail to consent to an alternate form of distribution.

These topics are discussed in Section II of Chapter 3 of The Retirement Plan Distribution Book.