242(b) election and RMD

[thepensionmaven]

We administer a DB that we set up in the 1980s with a valid 242(b) election.

The sole participant is now 78 and wants to terminate the plan.

Clearly she has to take an RMD prior to rolling over to an IRA.

Can we use the account balance method and then rollover? (I doubt it.)

How is the "make-up" distribution calculated?

I would assume by calculating each distribution, then accumulating that distribution at the plan's interest rate from the date it would have been taken through the current valuation year; adding all these up and subtracting from the current value of all the plan investments.

[John Feldt ERPA CPC QPA]

I don't have the reference in hand, but I am certain that when a participant elects a lump sum payment in a DB plan, the "account balance" method can be used in the year the lump sum is paid. Otherwise, no, it cannot be used.

[My 2 cents]

When something like a plan termination happens to a plan where someone well over 70 1/2 has a 242(b) election in place, is it necessary to accelerate distributions to bring them to where they would have been had the election not been made and minimum distributions had been made in the past?