DOH>70.5, what is MRD start date

[Guest crosseyetester]

Date of birth = 8/1/29

Age 70 1/2 = 2/1/00

Date of hire = 8/1/00

Vested at 7/31/05

MRD payable by 4/1/06

What is MRD calculation start date?

[Guest crosseyetester]

If someone has an idea on this, I'd appreciate some advice. Perhaps there has already been discussion on MRD's prior to vesting, but I have not managed to pick it up in my searches.

It seems to me that his MRD would either be calculated back to 8/1/02, when he first had an accrued benefit, even though it was not vested; or 8/1/05, when he becomes vested.

[Belgarath]

Is he a more than 5% owner? If not, then the RBD hasn't occurred yet.

If more than 5% owner, then I'd say technically the RBD is 4-1-02. However, since the RMD is calculated on the vested benefit, your calculation will produce a RMD of zero until such time as there is some percentage of vesting to apply to your calculation dates each year. You'd have to look at 1.401(a)(9)-5 or -6 as applicable depending upon whether DB or DC to determine the proper calculation based upon your plan year - don't knnow if you have a calendar year plan or not.

[Guest crosseyetester]

Thank you for your response.

He is not a 5% owner.

It is a DB plan.

It is calendar year.

It sounds to me then his MRD would be payable by 4/1/06 and calculated back to 8/1/05.

[Tom Poje]

of course one must follwo the terms of the document. hopefully most if not all would have been amended to state there is no 70.5 until a non 5% owner terminates. you did not indicate if this ee has indeed terminated

[Guest crosseyetester]

He has not terminated. I was under the impression that he still had the option to elect to begin receiving his MRD before actual retirement.

I have previously inquired about whether an active participant must elect to begin, or elect to defer, or do neither once he is 70 1/2 but do not recall receiving a response. Unfortunately, I'm still not clear on that issue.

Thank you.

[rcline46]

You plan document will spell it out clearly. There were several options available when the amendments to RMDs were required. If you don't understand the wonderful legalese, post it here and someone will interpret for you, or go to the document provider and ask them what it says.