MRD from defined benefit plan

[Pension RC]

I have a 78 year old participant who just terminated employment in October and for whom we prepared distribution forms. I know that if she selects a rollover, we will have to first process an MRD for 2013.

1) In that case, would the MRD be based upon the 12 months of 2013 or only based upon the months of November and December?

2) A related question (probably the answer to question 1 will answer question 2) - If she selects an annuity, will the two annuity payments for November and December satisfy the MRD?

Any help would be appreciated!

[mbozek]

I have a 78 year old participant who just terminated employment in October and for whom we prepared distribution forms. I know that if she selects a rollover, we will have to first process an MRD for 2013.

1) In that case, would the MRD be based upon the 12 months of 2013 or only based upon the months of November and December?

2) A related question (probably the answer to question 1 will answer question 2) - If she selects an annuity, will the two annuity payments for November and December satisfy the MRD?

Any help would be appreciated!

1.see reg. 1.401(a)(9)-6 Q/A-1(d) single sum distribution.

2. see same reg Q/A-1© annuity commencement

[Pension RC]

Thanks!

[My 2 cents]

Just to make sure that I understand the rules properly:

a. The participant's required beginning date is April 1, 2014 (the April 1 following the calendar year which contains the later of the participant's attainment of age 70 1/2 and the date of retirement from employment with the sponsor).

b. The first required distribution year would be 2013.

c. If the participant elects a lump sum during 2013, twelve times the monthly benefit on which the lump sum is based would not be eligible for rollover, on account of 2013.

d. If the participant elects a lump sum during 2014 (payable on or before April 1, 2014), an additional amount equal to a second year's monthly payments, for 2014 in addition to the amount for 2013 from c above, would also not be eligible for rollover.

e. If the participant elects to receive a monthly annuity beginning in 2013, those payments that are made in 2013 satisfy the minimum distribution requirements for 2013, and subsequent payments would satisfy the minimum distribution requirements for subsequent years.

f. If the participant elects a monthly annuity beginning in 2014 but not later than April 1, 2014, the fact that there would have been no payments made in 2013 does not represent a failure to receive a minimum distribution with respect to 2013. Those payments received in 2014 (even if only 9 payments) fully satisfy the minimum distribution requirements for 2013 and 2014.

By all means, if any of the above is incorrect, please post accordingly!

[Calavera]

By all means, if any of the above is incorrect, please post accordingly!

I agree with a. through f. In addition you can use the account method under c. and d. to reduce the RMD amount.