Required Minimum Distribution

[Guest Ed Walker]

Participant retired January 4th and has elected to receive pension (DB Plan) as an immediate annuity ie first payment Feb 4th. Client (not the participant) is purchasing required annuity (10 C&C) from insurance company.

Participant will reach 70 1/2 in June 2002. Insurance company is saying the participant must receive a minimum distribution before we purchase the annuity.

My reaction (1) This is not a rollover distribution, but the purchase of an annuity to provide the participants required benefit.(2)we are distributing the entire annuity contract to the participant before she is 70 1/2, (3) I did not stop to do any caculations but at 70 1/2 the current monthly benefit payments should exceed the RMD

Did I miss something?:confused:

[Belgarath]

Take a look at 1.401(a)(9)-1 G-3. I wasn't really clear from your message, if in # 2 the ownership of the annuity would be retained by the Trustee of the plan, or if it will actually be distributed to the annuitant as an IRA rollover. If ownership is really retained by the Trustee of the plan, then I don't think the distribution is required. If it is actually being transferred out of the plan, then I think the insurance company is correct.