DC Participant Receiving RMDs Buys Annuity Contract

[rocknrolls2]

A 401(k) plan participant has been receiving RMDs since s/he turned age 70 1/2 (having previously retired). This year, he decides to purchase an annuity contract with his remaining account balance with payments to begin as of 1/1/2008. He has not as yet received his RMD from the DC plan for 2007. Question: is he required to receive his 2007 RMD before the balance can be applied to purchase the annuity contract?

[masteff]

Yep - The purchase of an annuity commencing next year does not obviate the need for a distribution this year.

[rocknrolls2]

It turns out that the annuity contracts will begin making payments during November 2007. While I know that a participant who reaches the required beginning date and has the annuity contract make a first payment on or before that date is treated as having satisfied the minimum distribution requirement with respect to the first distribution calendar year, I question whether a participant who has been receiving minimum distributions under a defined contribution plan for a number of years can have an annuity contract purchased and receive merely two payments under the annuity contract during the distribution calendar year, and have that satisfy the participant's minimum distribution requirements for that distibution calendar year. I think it would be safer to receive a minimum distribution from the 401(k) plan for 5/6 of the distribution for the year and then have the annuity contract begin making payments. Any thoughts about this approach?