2001 RMD proposed regs and 403(b) plans

[John A]

Do the 2001 Required Minimum Distribution (RMD) proposed regulations apply to RMDs from 403(B) plans in 2001? For 401(k) and other qualified plans, a model amendment is provided, but it does not appear that any similar amendment is available to 403(B) plans. Does this mean that 403(B) plans must use the "old" rules for 2001, but the "new" rules for 2002?

[Belgarath]

I had the same question a while back. I couldn't find an "official" cite that I could use to back my assumption that you can use the new rules for 2001 for 403(B). There are sideways references and hints, but I couldn't find anything in black and white. I still think you can, but if asked to prove it, I'd have to do some tap-dancing.

[Guest Yanikoski]

Section 1.403(B)-2 of the new proposed regs seems pretty unambiguous on this topic: Q-1 asks: "Are section 403(B) contracts subject to the distribution rules provided in section 401(a)(9)," and answer A-1 says "Yes." I do think that there is some question, though, how the new rules apply. The answer to Q-2 of the same section suggests that 403(B) plans follow the same rules as other plans. But the answer to Q-3 says that all 403(B) balances must be distributed in accordance with the old MDIB rule that previously applied only to the grandfathered (pre-1987) balances. Since the new proposed regs also use the MDIB table, but allow an exception when there is a spouse more than 10 years younger, Q-2 would seem to say that that exception applies to 403(B) plans, and Q-3 would seem to say that it doesn't.