RMD from 403(b)

[Guest Donaldson]

Treas. Reg. § 1.403(b)-3 Q&A 4 provides that for purposes of calculating a participant's required minimum distribution (RMD) from more than one 403(b) plan, a participant can total the minimum amount from each 403(b) and take the total minimum distribution from any one of the 403(b) plans (rather than taking a minimum distribution from each plan). Does anyone know whether a plan must specifically permit that a person's total RMD for the year may be taken from its plan? What if a plan is silent on this point? Does that mean that a person can only take the RMD attributable to that plan only? Is there any authority one way or the other? Thank you for your comments. I truly appreciate it.

[Guest Yanikoski]

I am not aware of any authority on this subject, but it would be very odd for a plan to limit the withdrawals that someone over age 70 could take from a plan. Most people of that age are long retired, and it is not in the interest of the plan (and it would probably be considered contrary to the public welfare) to restrict withdrawals. Further, since the individual actually owns the product, it would be hard for the plan to impose this kind of limitation anyway, even if they had a reason for wanting to do it. The bottom line is that in almost all cases, 403(b) participants are free to withdraw the ENTIRETY of their balance once they reach this stage in their lives, without permission and without notice (though not without taxes, of course). So it stands to reason that they are also free to take the combined RMD amount from any account that has a sufficient balance. In rare cases there might still be some kind of surrender charge on the PRODUCT, and in even rarer cases their might be some small portion of non-vested funds that are unavailable for withdrawal, but these are the only potential limitations I can think of, and their real-life impact in RMD situations should be negligible.