2009 RMD Rollover

[SMB]

It is my understanding that, pursuant to Notice 2009-82, a participant who received a "purported" 2009 RMD in 2009 may do an indirect rollover to an IRA or eligible employer plan of all or any portion of such distribution by the later of November 30, 2009 or the date 60 days following receipt of the distribution.

Assuming my understanding is correct, may such a rollover be made back into the plan from whence the distribution was made?

[Blinky the 3-eyed Fish]

Yes, if the plan allows.

[Guest M. Martin]

I have a plan that is suspending RMD payments unless participants make an affirmative election to receive their RMD. A participant would like to receive 1/2 of his normal RMD amount but the plan does not provide for partial payments (only lump sums, substantially equal installments & RMDs).

Notice 2009-82 provides that distributions of 2009 RMDs may be rolled over to an IRA or other eligible retirement plan at any time on or before November 30, 2009 (or, if later, within 60 days after the 2009 RMD is distributed).

"Rollover relief for plans. Payments to a plan participant in 2009 will not be

treated as ineligible for rollover on account of § 402©(4)(A)if the payments

equal the 2009 RMDs or are one or more payments in a series of substantially

equal distributions (that include the 2009 RMDs) made at least annually and

expected to last for the life (or life expectancy) of the participant, the joint lives (or

joint life expectancy) of the participant and the participant’s designated

beneficiary, or for a period of at least 10 years. Accordingly, such payments can

be rolled over, provided the other rules of § 402© are satisfied."

However, in reviewing Notice 2009-82, it is unclear if the participant can elect to split his RMD payment by having a portion paid directly to him with the remainder being a rollover either back into the plan or to an IRA. If the full RMD is paid to him, can he then within 60 days roll only a portion into a plan/IRA or does the full RMD payment have to be a rollover in order for the rollover relief provisions to apply?

The plan could be amended but the sponsor really doesn't want to offer partial payments to terminated particiants.

[masteff]

A quick review of Sec 201 of WRERA shows it did not override the provisions of 402© that do allow only part of a distribution to be rolled over (with the remainder to be taxable). So, yes, he can do an indirect rollover of part of it. Note: you only want to issue a payment to the participant... direct rollovers are not permitted for this so don't even entertain the splitting of the payment itself.