1983 Waiver of RMD

[52626]

Good Morning,

I have a client who is a more than 5% owner. Back on 12/21/1983 he signed the waiver of RMD until the later of normal retirement age or the year in which he actually retires. This has allowed him to forego RMDs for 2011, 2012 and 2013.

The participant is still employed, but wants to take an in service distribution of his entire account and roll it to an IRA. He will continue to make 401(k) contributions and receive employer contributions.

Question - Does the RMD waiver prevent him from rolling his funds to an IRA? The notice talks about when the payment is made in annual installments over the lifetime of the participant with the balance at his death to his participant. OR since he is still active, and eligible for an in service, can he take his account and roll to the IRA.

In essence he will be rolling over funds that are not adjusted for prior RMDs due to the waiver - Is this ok??

We have the signed waiver, and it was properly and timely executed. Just never saw one before!

[GMK]

Unless the waiver says that it's irrevocable, can't the participant file a written revocation?

[ETA Consulting LLC]

Your participant signed a TEFRA 242(b)(2) election. You may read the election; as distributions must be made pursuant to the language within. Any changes from the election signed at that time would require him to take the RMDs for the years missed (no penalties).

Good Luck!

[KJohnson]

There is at least one PLR (and I think there may be two) that statues that election of an in-service distribution is not a revocation/change in the TEFRA election. PLRs technically only may be relied on by the party seeking the letter but you might search for these and look at the reasoning.

[masteff]

I got curious, here's at least one such PLR http://www.irs.gov/pub/irs-wd/0124028.pdf