Pre RMD vs Post RMD

[Nassau]

If a participant reaches his first required year for RMDs, and passes away that same year (so prior to 04/01 of the following year) without satisfying any portion of his RMD, has he died pre or post RBD? We need to clarify the answer to this question to understand whether or not the beneficiary needs to satisfy the participant's RMD prior to starting their own. We also need to clarify the answer to this question to understand whether or not we should apply pre RBD or post RBD rules to the bene.

Here are 2 scenarios that may help drill down to the information we are looking for. In both scenarios, the plan follows "new rules" for RMDs. Our question is at the end of Scenario #2.

Scenario #1:

A 72 year old participant has a termination date of 5/28/2010. So the first required year is 2010. The RMD for the year is $10,000. The participant decides not to defer his first required year until no later than April 1 of the following year and takes one withdrawal in the amount of $5,000 to count toward the RMD in September 2010. The participant passes away in November 2010. In this scenario, the bene does have to satisfy the remaining RMD for the participant ($5,000).

Scenario #2

A 72 year old participant has a termination date of 5/28/2010. So the first required year is 2010. The RMD for the year is $10,000. The participant does not take any payments that can be applied to the RMD, and he passes away in November of 2010. Technically his required begin date is April 1, 2011. Does the beneficiary have to satisfy the 2010 payment for the participant, or is there no requirement because he did not take any payments and died prior to the April 1, 2011 deadline?

[Guest Sieve]

Required beginning date is 4/1 of the year following the first distribution calendar year (i.e., 4/1 of the year followng the year in which occurs the later of (i) attainment of age 70-1/2 for a 5% owner, or (ii) termination of employment. (Treas. Reg. Section 1.401(a)(9)-2, Q&A-2.)

In scenario #2, no distributions are required to be paid for 2010.

[ETA Consulting LLC]

Same answer for both scenarios. He died before he reached his RBD, therefore age 70 1/2 distributions no longer apply. Let's suppose that he died on March 30, 2011 (the day before his RBD), his beneficiary would not have to receive a distribution until December 31, 2012. Remember, the 1 & 5 year rule would apply if his beneficiary is not the surviving spouse. Also, if the beneficiary is not a human, then the 5 year rule would apply.

Good Luck!