Are MRD elections still necessary

[Guest crosseyedtester]

Just trying to confirm - was there legislation this year which stated that an active participant over age 70 1/2 (not a 5% owner) no longer needs to make an election not to receive their MRD? Can a client not even offer them the option?

If an election is required from the participant, is it only to defer? Does a participant who wishes to begin receiving benefits have to formally make that election?

Thanks.

[Guest crosseyedtester]

Just trying to clarify our understanding regarding non-5% owners.

1. Is it enough to verify that a participant who is over age 70 1/2 is an active employee? Then, the participant does not need to make an election to receive or defer receiving the MRD? In other words, the participant may not even be notified of eligibility to receive a benefit.

2. Or, does the participant need to elect to defer, otherwise, that participant will automatically be given the MRD?

3. Or, vice versa, the participant must elect to receive in order to be given the benefit.

Thanks.

[Belgarath]

This is pretty hard to answer, since the document terms will govern.

Some documents, by the way, still provide that you start taking RMD's at age

70-1/2 even if you are not an owner.

In general, the plan will specify when a benefit is payable, such as normal retirement date, etc.. It will also have language specifying that even if a participant has elected to defer receipt of their benefits as permitted by the plan, that the minimum distribution requirements will override the election to defer receipt of their benefits. So the plan will distribute the required minimum, whether the participant wants it or not.