Timing of Distribution to Beneficiaries

[R. Butler]

63 year old participant dies. Has 3 beney's Wife gets 50%, D1 gets 25% and D2 gets 25%. I want to make sure I understand when distributions must begin under 401(a)(9). ( The document seems to pretty much justs restates the Code rules). From my understanding three options as to the timing of the distribution:

1. Beney's may elect to take installment distributions over their respective lives. The distributions would have to begin no later than the first year following the year of the participant's death.

2. Beney's may elect to take a lump sum distribution. The distribution would have to be made no later than the end of the fifth year following the year of the participant's death.

3. Beney may elect to commenece annuity distributions by the end of the year in which the participant would have turned 70 1/2 years of age.

Am I understanding the timing rules correctly? Tahnks in advance for any help.

[FundeK]

Can anyone provide any comments on R Butler's post from 2001? As well as my question below.

A spousal beneficiary can choose to distribute based on their life expectancy, and the payments must commence by the later of

(1) December 31 of the calendar year that follows the calendar year in which the participant died, or

(2) December 31 of the calendar year in which the participant would have attained age 70 1/2

So, if the participant was 60 when he passed can the spouse wait until the year in which the participant would have attained age 70 1/2 to commence distributions? Doesn't that violate the 5 year rule? Please help shed some light on this for me!!

[Lame Duck]

Code Section 401(a)(9)(B)(iii)(III) provides an exception to the 5-year rule for distributions that begin "not later than 1 year after the date of the employee's death or such later date as the Secretary may by regulations prescribe." (December 31st of the year following the year of death.) Code Section 401(a)(9)(B)((iv)(I) provides an exception to the one year rule for a surviving spouse - "the date on which the distributions are required to begin under clause (iii)(III) shall not be earlier than the date on which the employee would have attained age 70 1/2"

Therefore it is not considered as violating the 5-year rule since it is governed under the exception to the 5-year rule.