MRD Using new or old tables?

[Guest CINCY]

Was wondering if anyone has heard of this. We are being told that for example. A company amends to use the new table and signs it July 01, 2002. In this situation we are told we should be using the old table to calculate the amount up until July 01, 2002 and the new table to calculate the rest of the year. Therefore it is best to not use the new table until 2003. Others of us were under the impression that the amendment could be retroactive. Anything we can find says to use EITHER table. Thanks for any comments.

[E as in ERISA]

I think that if you are amending mid-year, the main advantage of using the same adoption date and effective date is that you don't have to correct excess distributions form earlier in the year.

I think that if you amend 7/1, the amendment applies to all participants (even those who have already taken a distribution before 7/1).

If the distribution they took before 7/1 was more than the required distribution under the new rules, then they have met the new requirements. And because it's not retroactive, you don't have to consider restoring any excesses back to the plan.

But if the distribution they took before 7/1 was less than the distribution under the new rules, then an additional distribution has to be made after 7/1.

If you adopt an amendment 7/1 that is effective 1/1, then you may have made excess distributions earlier in the year that are in violation of you plan terms as amended.

[Tom Poje]

this 7/1 stuff sounds silly to me.

for articles discussing this, you might check under

Benefits Buzz 10/14/02 article by benefits buzz.

or try Noel Ice's excellent discussion.

http://www.trustsandestates.net/Nutshell-P...m#_Toc536524792

in particular, see Article 2 for effective date

and make up your own mind.

[KJohnson]

. Your amendment should reflect your operation. Katherine has summarized Rev Proc. 2002-29 which is pretty explicit on what must be done if you "switch" methods mid-year in 2002. It provides:

.02 If a plan sponsor begins operating its plan under the § 401(a)(9) Final and Temporary Regulations on a date in 2002 and prior to such date the plan sponsor has made required minimum distributions for 2002 under the § 401(a)(9) 1987 Proposed

Regulations or the § 401(a)(9) 2001 Proposed Regulations, then the plan must also be amended to provide the transitional rule for 2002 required minimum distributions that is set forth in section 1.2 of the model amendments in the Appendix to this revenue procedure

The transitional rule in the model amendment states:

1.2. Coordination with Minimum Distribution Requirements Previously in Effect. If the adoption agreement specifies an effective date of this article that is earlier than calendar

years beginning with the 2003 calendar year, required minimum distributions for 2002 under this article will be determined as follows. If the total amount of 2002 required minimum distributions under the plan made to the distributee prior to the effective date of this article equals or exceeds the required minimum distributions determined under this article, then no additional distributions will be required to be made for 2002 on or after such date to the distributee. If the total amount of 2002 required minimum distributions under the plan made to the distributee prior to the effective date of this article is less than

the amount determined under this article, then required minimum distributions for 2002 on and after such date will be determined so that the total amount of required minimum distributions for 2002 made to the distributee will be the amount determined under this article.