Cash Balance Distibution post age 70 1/2

[Guest helpUretire]

I have a client that is retiring at the age of 74. She has a cash balance plan that is saying that they need to calculate the RMD prior to distribution and then the RMD can not be rolled to her IRA. This part I get. My question is, does the Worker, Retiree and Employer Recovery Act of 2008 that was signed into law in late December relieve the employer from this calculation? All RMD's from defined contribution plans are not required but I can not find anywhere if this pertained to cash balance plan rollovers.

Please direct me to where I can find the answer.

Randy Green

[Andy the Actuary]

From WRERA:

SEC. 201. TEMPORARY WAIVER OF REQUIRED MINIMUM DISTRIBUTION

RULES FOR CERTAIN RETIREMENT PLANS AND ACCOUNTS.

(a) IN GENERAL.—Section 401(a)(9) of the Internal Revenue

Code of 1986 (relating to required distributions) is amended by

adding at the end the following new subparagraph:

‘‘(H) TEMPORARY WAIVER OF MINIMUM REQUIRED DISTRIBUTION.—

‘‘(i) IN GENERAL.—The requirements of this paragraph

shall not apply for calendar year 2009 to—

‘‘(I) a defined contribution plan which is

described in this subsection or in section 403(a)

or 403(b),

‘‘(II) a defined contribution plan which is an

eligible deferred compensation plan described in

section 457(b) but only if such plan is maintained

by an employer described in section 457(e)(1)(A),

or

‘‘(III) an individual retirement plan.

Unfortunately, this does not grant a pass to defined benefit plans.

[SoCalActuary]

I have a client that is retiring at the age of 74. She has a cash balance plan that is saying that they need to calculate the RMD prior to distribution and then the RMD can not be rolled to her IRA. This part I get. My question is, does the Worker, Retiree and Employer Recovery Act of 2008 that was signed into law in late December relieve the employer from this calculation? All RMD's from defined contribution plans are not required but I can not find anywhere if this pertained to cash balance plan rollovers.

Please direct me to where I can find the answer.

Randy Green

You need to remember that a cash balance PENSION plan is a defined benefit plan with a special formula.