RMD's (QDRO related)

[Nassau]

Participant recently completed a QDRO, 50/50 split, with an effective valuation date of 12/30/2011. The QDRO transfer transaction was processed and traded normally on 5/2/2012 with earnings from valuation date onward. No issues there. Participant's RBD is 4/1/2013. Participant is in the process of initiating his first year of RMDs and is requesting that the effective date and amount of the QDRO be applied to his 2012 RMD. Essentially he is stating that because the QDRO dictates that 50% of his balance was not his starting 12/30/2011, even though money did not move into separate accounts until months later (5/2/12), that his 2012 RMD should use 50% of his 12/31/2011 closing balance to determine his RMD amount for 2012.

Please confirm:

Option 1: $312,214.02 / 27.4 = $11,394.67 (participant satisfies 100% of 2012 RMD)

Option 2: $156,107.01 / 27.4 = $5,697.34 (50% prior year end balance due to QDRO effective date)

What should the RMD be?

[mbozek]

Participant recently completed a QDRO, 50/50 split, with an effective valuation date of 12/30/2011. The QDRO transfer transaction was processed and traded normally on 5/2/2012 with earnings from valuation date onward. No issues there. Participant's RBD is 4/1/2013. Participant is in the process of initiating his first year of RMDs and is requesting that the effective date and amount of the QDRO be applied to his 2012 RMD. Essentially he is stating that because the QDRO dictates that 50% of his balance was not his starting 12/30/2011, even though money did not move into separate accounts until months later (5/2/12), that his 2012 RMD should use 50% of his 12/31/2011 closing balance to determine his RMD amount for 2012.

Please confirm:

Option 1: $312,214.02 / 27.4 = $11,394.67 (participant satisfies 100% of 2012 RMD)

Option 2: $156,107.01 / 27.4 = $5,697.34 (50% prior year end balance due to QDRO effective date)

What should the RMD be?

Under Reg 1.401(a)(9)-8 Q/A-6(b)(1) and (2) AP is required to take mrd on the 50% in her separate account based on her life expectancy in accordance with the rules of 1.401(a)(9)-5. Since there was 0 in her separate account on 12/31/11 her MRD for 2012 is 0. Her MRD in 2013 is based on her account balance as of 12/31/12.

Problem for him is that for the purpose of his 2012 MRD he owned the entire account balance as of 12/31/11 so he has to take MRD on Option 1. MRD for 2013 will be based on his 50% of account as of 12/31/12. AP did not become owner of 50% of benefits until funds were transferred to her separate acocunt in may 2012.