RMD's

[Guest Twinky]

Going crazy...short trip, I know...please help!

I have been researching RMD's for non-spouse's and almost everything I read is about IRA's. Do the same rules apply to 401(k) Plans?

There was a participant in our plan who was receiving his RMD. He passed away at the end of 2005. He was never married. He has several beneficiaries listed (nephews, neices, great nephews, neices). I know that they cannot rollover his account, however can they continue to receive his RMD?

If so, is it based on the oldest beneficiary (for the life expectancy factor)? Does the 5 year rule apply?

This also made me wonder about another question...how would it work if the beneficiary was a Trust?

Any help you can give me would be greatly appreciated.

[QDROphile]

What does the plan say? Section 401(a) (9) and related regulations set a standard, but the plan can be designed to be more restrictive.

[Guest Twinky]

This is the only thing I can find that comes close to explaining...

"If distribution of the Participant's benefit has begun and the Participant dies before his entire benefit has been distributed to him, the remaining portion of such benefit shall be distributed at least as rapidly as under the method of distribution being used as of the date of the Participant's death."

It then goes on to explain how the life expectancy calculation works...

"The life expectancy (or joint and last survivor expectancy) calculated using the attained age of the Participant (or Designated Beneficiary) as of the Participant's (or Designated Beneficiary's) birthday in the applicable calendar year reduced by one for each calendar year which has elapsed since the date life expectancy was first calculated. If life expectancy is being recalculated, the applicable life expectancy shall be the life expectancy as so recalculated. The applicable calendar year shall be the first Distribution Calendar Year, and if life expectancy is being recalculated such succeeding calendar year."

Sounds like they can continue to receive the RMD to me...??? But it doesn't specify if there are multiple beneficiaries what is used for the life expectancy and it doesn't state that it has to be distributed within 5 years...??? Is there a "general rule"? What is the standard?

Also, I was told that they cannot continue to receive the RMD from his IRA...is this true?

Thanks again!

[Appleby]

The five year rule applies only if the participant died before RMDs were required to begin…so it would not apply in this case.

If separate accounting is established by 12/31/2006, each beneficiary may use his/her own life expectancy to determine post-death RMD amounts for his/her inherited portion. If not, the life expectancy of the oldest beneficiary must be used.

Not sure what you mean about the IRA…but the same rules apply.

[Guest Twinky]

Thank you very much!