MRD's--spousal consent and hangers on

[Brian Gallagher]

I have a plan that requires spousal consent for distributions. Is it required for MRD's though?

If so, can someone give me a cogent reason why? I understand why it is needed for regular distributions (eg: termination, in-service), but not for MRD's. To me, it is akin to an excess--not eligible for rollover--and not subject to S.C.

And on another topic: MRD's and hangers on

What recourse does a Plan Administrator have if a participant is not taking his/her MRD? Is there a force-out rule similar to the $5000 rule? And what if the MRD is over $5000? I hate to think that a participant's (or spouse's) recalcitrance or reluctance could jeopardize a plan's qualification.

Any thoughts would be appreciated.

[david rigby]

Having spousal consent requirements would take the teeth out of the"requirement" now wouldn't it?

The MRD is not eligible for rollover.

What do you mean "is not taking his/her MRD"? The plan does not have to request the participant's permission. The term "required" seems to fill the same role as a "force-out".

[Blinky the 3-eyed Fish]

Here's is my logic for why, although keep in mind it follows logic, so it may not be correct.

First, the fact that it is not eligible for rollover has nothing to do with whether consent is required. What does have to do with it is whether or not an annuity is an option for taking the minimum distribution for balances over $5K. With a DB plan, the annuity distribution method is the default method, so all DB plans need spousal consent if not paid in a J&S annuity. With DC plans, I believe that a plan that otherwise has annuity options could only allow for the minimum distribution to be paid as a lump sum. If that was the case, then no spousal consent would be required. So, check your document if you are talking about a DC plan.

[KJohnson]

From the Regs:

Q–4. If a distribution is required to be

made to an employee by section

401(a)(9)(A) or is required to be made to

a surviving spouse under section

401(a)(9)(B), must the distribution be

made even if the employee, or spouse

where applicable, fails to consent to a

distribution while a benefit is

immediately distributable?

A–4. Yes, section 411(a)(11) and

section 417(e) (see §§ 1.411(a)(11)–

1©(2) and 1.417(e)–1©) require

employee and spousal consent to certain

distributions of plan benefits while such

benefits are immediately distributable. If

an employee’s normal retirement age is

later than the employee’s required

beginning date and, therefore, benefits

are still immediately distributable, the

plan must, nevertheless, distribute plan

benefits to the employee (or where

applicable, to the spouse) in a manner

that satisfies the requirements of section

401(a)(9). Section 401(a)(9) must be

satisfied even though the employee (or

spouse, where applicable) fails to

consent to the distribution. In such a

case, the plan may distribute in the form

of a qualified joint and survivor annuity

(QJSA) or in the form of a qualified

preretirement survivor annuity (QPSA),

as applicable, and the consent

requirements of sections 411(a)(11) and

417(e) are deemed to be satisfied if the

plan has made reasonable efforts to

obtain consent from the employee (or

spouse if applicable) and if the

distribution otherwise meets the

requirements of section 417. If, because

of section 401(a)(11)(B), the plan is not

required to distribute in the form of a

QJSA to a employee or a QPSA to a

surviving spouse, the plan may

distribute the required minimum

distribution amount to satisfy section

401(a)(9) and the consent requirements

of sections 411(a)(11) and 417(e) are

deemed to be satisfied if the plan has

made reasonable efforts to obtain

consent from the employee (or spouse if

applicable) and if the distribution

otherwise meets the requirements of

section 417.