Rolling Over RMD's from Qualified Plans

[Guest Asvedlow]

Under the proposed Reg's issued 1/17/2001, 1.401(a)(9)-7 Q-1 and 2, it clearly indicates that the RMD may be rolled over from a qualifed plan to another plan and that the receiving plan does not consider this amount in the determination of the amount of RMD to be issued by the receiving plan. There seems to be quite a bit of confusion here. Clearly in IRA's, the rollover of an RMD is not permitted. It seems that the proposed Reg's, recently upheld, now allow for qualified plans to rollover the RMD. This effectively "buys" a year for the participant from taxation, and is basically a tax dodge in the early years. Anyone have any thoughts on this. If correct, this is a major "loophole" in the issuance of the RMD from a taxation point of view from qualifeid plans.

[R. Butler]

I don't agree that you can rollover an RMD. See 1.402©-2 Q&A 7(a).

[John A]

I agree with R. Butler. Although the language of 1.401(a)(9)-7 is confusing, both Q&A 1 and 2 indicate that a rollover does NOT affect the Required Minimum Distibution for either the distrbuting plan or the receiving plan (it will affect the receiving plan for the next year because it will increase the 12/31 account balance).

The confusing language to me is in A-1 when it says "treated as a distribution by the distributing plan for purposes of section 401(a)(9), notwithstanding the rollover." However, I believe it is significant that it does NOT say "treated as a required minimum distribution."

I don't think a rollover buys the participant any time at all, as I do not believe the rollover satisfies any part of the Required Minimum Distribution.