2nd year rmd amount

[Draper55]

Participant turned 70.5 in 2012 and commenced rmd on 4/1 /2013 for 100%j&s amount with cola increasing at 4.75% as annual annuity(not monthly). Need.to make adjustment for 2013 accrual. Benefit at 12/31/2012 was AE of NRA amount(formula late accruals are much smaller).

At 12/31/2013 i compute plan benefit as AE of NRA benefit. Next subtract similar amount as of 12/31/2012. Then compute 12/31/2013 AE annuity of benefit paid during 2013(since no risk of forfeiture accumulate payment with interest only before annuitizing). Subtract this piece to get my life annuity additional accrual. Turn this into 100% j&s annuity and add to 1st year payment increased at 4.75% to get my year two annual payment amount. Does this sound correct?

[My 2 cents]

If the plan is a defined benefit plan, wouldn't continued payments of non-decreasing periodic benefits payable for at least the life of the participant (increased, as appropriate, for plan cost of living benefits) automatically be considered sufficient to meet the MRD requirements (especially if there are no new accruals to go into effect)? The MRD regulations specify, for defined benefit plans, that paying ongoing lifetime benefits of that sort do meet the regulations. If it is a defined benefit plan, I think you would just continue paying the established 100% J&S benefit (plus applicable changes due to the plan's COLA) without having to perform more than perfunctory calculations (to verify that additional accruals would not affect the amounts payable).

Remember, actuarial increases for deferred retirement beyond NRA do not result in additional accruals. Hard-frozen plans (frozen before 9/1/05) that are exempt from IRC Section 436 can certainly recognize deferral beyond NRA through actuarially increased benefits without losing their status.

[Draper55]

this is a 5% owner still working..so i guess my thought is that i calculate additional accruals

as if 401(a)(9) did not exist and then adjust this accrual down for the AE of the payments made. I then

add this net accrual to the existing rmd stream. just wanted to make sure i am not way off in my approach.

[david rigby]

Yes, you calculate additional accruals (but that is not related to the ownership status), using the plan provisions. Also you calculate the AE of NRB, using plan provisions. Be careful, since not all plans use the same method. It's possible that the net additional accrual is zero.