Required Distributions - Defined Contribution Plan

[luissaha]

I have a money purchase pension plan that requires distributions of entire account balances before age 70 1/2. The plan also contains the necessary language regarding required minimum distributions. A participant who was past the required beginning date recently applied for retirement and requested a rollover of his account balance to an IRA. (The participant's account balance was not distributed on the required beginning date because the plan had an incorrect birthdate for the participant). The participant was advised by the plan administrator that this was not an eligible rollover distribution because it was a required distribution under 401(a)(9) and plan rules. He was told he would have to take a distribution of his entire account and the money could not be rolled-over.

The issue from my point of view is as follows:

If the plan has the required minimum distribution language and a provision that calls for distribution of entire account balances before age 70 1/2 there seems to be a conflict. In my opinion, it would be reasonable to calculate the participant's rmd, pay that to him, and roll the remaining account balance directly to the IRA. I guess what I am saying is that if the RMD language is in the plan, shouldn't the participant be allowed to take advantage of these rules?

I would appreciate any comments.

[Guest Pensions in Paradise]

You are correct. The RMD portion must be paid to the participant, and the plan MUST allow the participant to rollover any remaining account balance to an IRA. IRC 401(a)(31)