Guidance on waiver of 2009 minimum required distributions

[Guest HRAdvisor]

Does anyone know if the IRS has published anything stating affirmatively that the waiver for RMDs for 2009 does not apply to defined benefit plans? I’ve seen Notice 2009-9, which mentions applicability to individual account plans, but this is not something that the average participant will understand.

Further, there is a problem that many “experts” are telling participants that the waiver does apply to all plans. The experts include the usual financial advisors, but it also includes the people on the IRS phone lines (including people who are serving as specialists). On IRS.gov, there is a publication that says generically that the waiver applies to qualified retirement plans. I even called the IRS number myself and spoke to a “specialist” who swore that the waiver applied. Participants are refusing to take RMDs, and we need to find something in writing that says in a straightforward manner that pension payments must occur.

I wrote to RetirementPlanQuestions@irs.gov (mentioned in Notice 2009-9) yesterday, but I haven’t heard back yet.

[Blinky the 3-eyed Fish]

The waiver absolute does not apply to DB plans. Just read the first sentences of the Notice:

On December 23, 2008, the President signed the Worker, Retiree, and Employer Recovery Act of 2008 (the Act) into law. Section 201 of the Act waives any required minimum distributions (RMDs) for 2009 from retirement plans that hold each participant's benefit in an individual account, such as §401(k) plans and §403(b) plans, and certain §457(b) plans.

A DB plan does not hold each participant's benefit in an individual account.

[Guest HRAdvisor]

Yes, you and I know that from reading the information, but plan participants and apparently many IRS personnel do not get it. I'm trying to get documentation to convince plan participants; I already know the answer.

I did find something from the Vanguard Group that specifically states DB plans don't have the waiver. See the Regulatory Brief: Discover how the WRERA affects DB and DC plans, from Vanguard, dated 01/05/2009. It's in the Institutional Investors section, under the tab Research and Commentary. Not from the IRS, but it's something.

[Blinky the 3-eyed Fish]

But it's right there in the notice, so who cares what some guy you call up at the IRS says?

[Guest HRAdvisor]

Like I said, I need to convince plan participants, who aren't believing the correct sources.

[Blinky the 3-eyed Fish]

Have them read the notice.

[Guest HRAdvisor]

Did that. Also gave them all sorts of items from law firms, retirement practitioners, etc.

I know -- at some point you've done all you can do and just move on.

[JAY21]

I've had the same problem. Here is a pretty good article I found that may help, though the source of the article isn't a household name.

Minimum_Required_Distributions_2009.pdf

[Guest HRAdvisor]

Good one. I can at least add it to our references for participants.

[Effen]

I agree that it does not apply to db plans, but if the client wants to interpret it differently, that is their choice.

Make sure you put your position to them in writing and maybe cc their ERISA counsel. That way, if/when they get caught, it won't come back on you.

[Slider]

Just take a look at the change in Code Section 401(a)(9)(H): It specifically says that the temporary waiver only applies to DC Plans and IRAs.