2-parter

[SMB]

Facts: DC Plan participant, age 72, still actively employed, not an owner, balance ~$200,000.

Participant would like to take a $50,000 loan (no prior or existing loans) and roll over her balance to an IRA as an in-service distribution.

Question #1: Will she need to keep $50,000 in her Plan account as collateral for the loan? Or, by virtue of the fact that her account balance was sufficient to support the $50,000 loan at the time the loan was made allow her to subsequently roll over her entire account balance (except the loan) to an IRA?

Question #2: Unlike her Plan account, the rollover IRA would be subject to required minimum distributions. However, since there was no balance in the rollover IRA as of 12/31/07, would 2009 be the first year she would be subject to RMD from her IRA?

Thanks for any and all input!

[Guest Sieve]

Q-1: I don't think you'd have to leave anything else in the plan account--although I haven't checked the regs on that. I think the rule you mention is the appropriate rule in this instance.

Q-2: According to Reg. Section 1.401(a)(9)-7, Q&A-2 & -4 (referred to in Reg. Section 1.408-8, Q&A-7), it doesn't look like there would be a required minimum distribution until 2009, and that MRD would be based on the 12/31/2008 IRA account balance. If the individual has other IRAs, then this particular IRA would not be considered in the distribution calculation until 2009).

[david rigby]

Will amending the plan to permit in-service distributions accomplish the goal?

(That is, no loan.)