Rollover after Starting Min Distrib

[Guest Patti Perdue]

A taxpayer who has been receiving minimum distributions for several years from his keogh, rolled the keogh into an IRA. Can he make new elections as to how the minimum distribution will be calculated from the IRA that is differenct from his earlier election for the keogh?

[Gary Lesser]

This is a really good question. Although it is not entirely clear, I believe the answer is somewhere between "no" and "maybe" (although a MRD may not be rolled over or transferred to an IRA). Code Section 408(a)(6) provides that rules similar to the rules of Code Section 401(a)(9) apply to an IRA. Prop Treas Reg 1.401(a)(9)-1(e), Q&A G-2 reads as follows:

G-2. Q. If an amount is distributed by one plan (distributing plan) and is rolled over to another plan (receiving plan), how are the benefit and the minimum distribution under the receiving plan affected?

A. (a) Except as otherwise provided in paragraph (B), if an amount is distributed by one plan (distributing plan) and is rolled over to another plan (receiving plan), the benefit of the employee under the receiving plan is increased by the amount rolled over. However, the distribution has no impact on the minimum distribution required to be made by the receiving plan for the calendar year in which the rollover is received. But, if a minimum distribution is required to be made by the receiving plan for the following calendar year, the rollover amount must be considered to be part of the employee's benefit under the receiving plan. Consequently, for purposes of determining any minimum distribution for the calendar year immediately following the calendar year in which the amount rolled over is received by the receiving plan, in the case in which the amount rolled over is received after the last valuation date in the calendar year under the receiving plan, the benefit of the employee as of such valuation date, adjusted in accordance with F-5, will be increased by the rollover amount valued as of the date of receipt. For purposes of calculating the benefit under the receiving plan pursuant to the preceding sentence, if the amount rolled over is received by the receiving plan in a different calendar year from the calendar year in which it is distributed by the distributing plan, the amount rolled over is deemed to have been received by the receiving plan in the calendar year in which it was distributed by the distributing plan.

(B) If an amount is distributed by the distributing plan after the employee's required beginning date under both the distributing plan and the receiving plan, and the designated beneficiary of the employee under the receiving plan is a designated beneficiary with a life expectancy that is longer than the life expectancy of the designated beneficiary under the distributing plan, the following rule will apply. In such case, the receiving plan must separately account for the amount rolled over and treat it as a separate benefit. It must then begin distribution of such separate benefit in the calendar year following the calendar year in which the amount rolled over was distributed by the distributing plan. The separate benefit attributable to the rollover amount must be distributed over a period not exceeding the period (including any adjustments for recalculation under section 401(a)(9)(D), if applicable) used by the distributing plan to determine the employee's minimum distribution with respect to the benefit attributable to the amount rolled over. For purposes of determining the life expectancies or lives used to determine the minimum distribution under the receiving plan, the designated beneficiary under the distributing plan will be the designated beneficiary under the receiving plan (with respect to the benefit attributable to the amount rolled over). If such beneficiary is changed under the receiving plan to a different beneficiary from the designated beneficiary under the distributing plan, or a beneficiary is added who was not a beneficiary under the distributing plan, the rules in E-5 applicable to changes in beneficiaries will be used to determine the period over which distributions must be made by the receiving plan.

[This message has been edited by Gary Steven Lesser (edited 11-04-98).]

[This message has been edited by Gary Steven Lesser (edited 11-04-98).]

[Dave Baker]

The individual has passed the April 1 of the year after the year in which he or she attained age 70-1/2?