Required minimum distributions - active over 70 1/2

[Guest cde]

Plan maintained old requirement for actives > 70 1/2. Distribution of the accrued benefit (AB) began on 4/1 following 70 1/2. This benefit was payable as a life annuity. Each 1/1 update AB. While active the participant has pre-retirement survivor coverage. Once participant actually retires, plan provides makes elections on late retirement date (LRD).

Did the old regulation require or was it an option that the benefit calculated at LRD be offset by the actuarial value of any payments previously made to the participant as a required minimum distribution?

Participant retired 7/1/04. He is still receiving his AB (updated to 1/1/04) as of now.

Plan does not provide for retroactive annuity starting date.

Retiree needs to make election on form of benefit payment.

Propose: Recalculate benefit at LRD and determine value of optional forms of this benefit on 1/1/05. For lump sum option, use interest rates applicable on 1/1/05. Make payments for 6 months (7/04 through 12/04) for additional AB accrued from 1/1/04 to 7/1/04. Begin payments on 1/1/05 in accordance with option elected or pay lump sum.

Is this proposal acceptable?