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QDRO and RMD


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A QDRO was filed in 1996. The alternate payee (former spouse) has left her money in the 401(k) plan all these years. It is nearing the time for her first RMD. Is it calculated based on the alternate payee's date of birth or the employee's? The Pension Answer Book seems to indicate that the employee's RBD is a factor. That doesn't make sense to me since they have been divorced for so long and the employee has remarried.

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If a QDRO was executed the 401K should have segregated into a separate account or distributed the proceeds to the AP. Therefore the RMD is based on the AP's DOB. Remember her share of the 401K (which should be in a separate account) is now hers and she is in effect the Participant/Employee with all the benefits of an employee for her share. So it is her DOB that is used.

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I don't think so, CADMT. See Treas Reg section 1.401(a)(9)-8, Q&A--6. The benefit is still the benefit of the participant (sort of) for purposes of section 401(a)(9). Hence the administration of QDROs by Fidelity and others is not designed to comply with the law.

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I agree. It seems strange that the AP's benefit would be subject to the participant's RMD requirement based on the way AP benefits are segregated in benefit systems to appear as a separate account. However, an AP is just that: an alternate payee. The AP is a beneficiary of the plan based on his or her interest in the participant-employee's benefit but the AP is merely a different payee of the participant's accrued benefit. An AP is subject, to an extent, to the rules applicable to the participant's benefit.

I don't know the true reason why Fidelity and others let the AP's segregated account follow RMD rules under the AP's DOB. It may be that they have a good faith belief that the Q&A does not deserve deference as an interpretation of the regulation. It's probably laziness on their part to make their system calculate the RMD appropriately. FIdelity's internal group that designs systems for their retirement plans has a "it's close enough" approach to their job.

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The AP does have a segregated account. Participant is a non-owner. His DOB is 12/1939 and he retired on 10/31/2012. His RBD was 4/1/13 and he took his first RMD timely in 2012. AP's DOB is 4/29/1943. Since I was not aware of this rule, I missed her first distribution by 4/1/13, thinking her RBD was 4/1/14. Should the AP receive 2 RMD's this year to make up for the one that was missed?

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