MRDs

[Guest lforesz]

It's that time of year again, and we have to remember the MRD requirements all over again.

Here is the question. If a plan adopted the SBJPA rules and allowed participants who had not yet commenced to defer until retirement, can a participant who is now age 72 decide to commence MRDs even while actively employed? The plan has no in-service withdrawal provision so we cannot use that to allow a distribution from the Plan. Does anyone know?

If so, we would appreciate the help.

Thanks

[Appleby]

Yes. Such participant may commence distribution.

The provision permits, but does not mandate, the participant to defer taking their RMD until they retire

This would not be considered an in-service withdrawal.

see following thread for further explanation

http://benefitslink.com/boards/index.php?showtopic=12711

[Guest lforesz]

Hi,

I tend to believe that a plan can eliminate in-service MRDs for participants who had not yet commenced distribution as long as the plan is properly amended.

I think this because when I read our prototype document, it allows the plan sponsor to elect to eliminate the in-service withdrawal option for participants who attain age 70 1/2 after the later of December 31, 1998 or the adoption date of the GUST restatement. It footnotes this selection that this option may only be selected if the amendment to eliminate the in-service withdrawal distribution is adopted no later than the last day of the GUST remedial period.

So, it seems to me that if a plan checks this, then anyone who is not age 70 1/2 as of such date would not be permitted to take in-service withdrawals at age 70 1/2 unless they had an ancillary in-service withdrawal provision in the Plan.

What do you think?

[KJohnson]

IFOREZ is correct, it all depends how your Plan was updated for GUST. Many have indeed eliminated the "in-service" distribution option at age 70 1/2. This was specifically allowed in revisions to the 411(d)(6) regulations. See 1.411(d)(4) Q&A 10(B).

Any such amendment is effective as of the later of December 31, 1998 or the date the amendment is actually adopted. The amendment also must be adopted prior to the end of the GUST remedial amendment period.

Thus, if your Plan has not been updated for GUST, it is probable that the "in-service" distribution is still in place. If however, your Plan has been updated, you should check the language to see if the in-service distirbuiton option prior to actual retirement/separation from service has been eliminated.