Required Minimum Distributions

[Andy the Actuary]

The DB Plan says to start the pension on April 1 following . . .

The election package gets completed by the end of February and is submitted to the Bank for processing. The initial monthly pension check is not cut until April 11, 2011. Have the RMD rules been violated?

Suppose this were April 1, 2012 which is a Sunday, and so the check is not dated until April 2, 2012. Have the RMD rules been violated?

As a practical matter, the rules have been complied with. Has anyone have experience or knowledge to the contrary?

[mbozek]

The DB Plan says to start the pension on April 1 following . . .

The election package gets completed by the end of February and is submitted to the Bank for processing. The initial monthly pension check is not cut until April 11, 2011. Have the RMD rules been violated?

Suppose this were April 1, 2012 which is a Sunday, and so the check is not dated until April 2, 2012. Have the RMD rules been violated?

As a practical matter, the rules have been complied with. Has anyone have experience or knowledge to the contrary?

Rules for DB commencement:

Reg. 1.401(a)(9)-6 Q/A-1© Annuity payments must commence on or before the employee's RBD (April 1 of the calendar year following the year in which the employee attained 70 1/2).

Under the IRC if the date for performing an act under the IRC falls on a Saturday, Sunday or a holiday the date for performance is extended until next business day. The date of payment of the RMD is the date the check is mailed by the plan adminstrator or trustee, not the date on the check.

[Andy the Actuary]

The date of payment of the RMD is the date the check is mailed by the plan adminstrator or trustee, not the date on the check.

So, a check with a date of April 1, 2011 that is mailed by the bank on April 2 would be in violation?

If a Plan makes payment as of the end of the month, then would your explanation mean that a check dated April 30 that is mailed March 31 is okay? If not, then the Plan would need to have the pension start March 31 and mail the check prior to this date.

[mbozek]

The date of payment of the RMD is the date the check is mailed by the plan adminstrator or trustee, not the date on the check.

So, a check with a date of April 1, 2011 that is mailed by the bank on April 2 would be in violation?

If a Plan makes payment as of the end of the month, then would your explanation mean that a check dated April 30 that is mailed March 31 is okay? If not, then the Plan would need to have the pension start March 31 and mail the check prior to this date.

Under IRS rules the check is deemed received on the date it mailed/postmarked at the PO, the same as a tax return is deemed filed on the date is mailed/postmarked. It will also be received on the date is sent electronically. If the check dated April 1 is mailed on April 2 it will be a timely MRD if April 1 is a Sunday.

I dont understand why a plan would send a post dated check that could not be cashed for 30 days, since the check would be taxable in 2011 regardless of when it is cashed. The IRS rules deem the check to be received on the date is is mailed out, subject of course, to collection of the funds by the participant. I dont know whether a post dated check would be legal under the banking laws.

Why cant the plan mail the check for the MRD due April 1 on the last business day in March like any normal business?

[Andy the Actuary]

The date of payment of the RMD is the date the check is mailed by the plan adminstrator or trustee, not the date on the check.

So, a check with a date of April 1, 2011 that is mailed by the bank on April 2 would be in violation?

If a Plan makes payment as of the end of the month, then would your explanation mean that a check dated April 30 that is mailed March 31 is okay? If not, then the Plan would need to have the pension start March 31 and mail the check prior to this date.

Under IRS rules the check is deemed received on the date it mailed/postmarked at the PO, the same as a tax return is deemed filed on the date is mailed/postmarked. It will also be received on the date is sent electronically. If the check dated April 1 is mailed on April 2 it will be a timely MRD if April 1 is a Sunday.

I dont understand why a plan would send a post dated check that could not be cashed for 30 days, since the check would be taxable in 2011 regardless of when it is cashed. The IRS rules deem the check to be received on the date is is mailed out, subject of course, to collection of the funds by the participant. I dont know whether a post dated check would be legal under the banking laws.

Why cant the plan mail the check for the MRD due April 1 on the last business day in March like any normal business?

I thank you for your help. My example is for when a play document specifies payment to be made at month end rather than as of the beginning of the month. I suspect in this case starting the pension as of March 31 would be the appropriate course.