242(b) RMD

[MGOAdmin]

Facts:

1. Plan year end is 4/30/2017

2.Owner A signed a 242(b) election to delay his RMDs - the 242(b) indicates distributions should commence within 60 days after the last day of the plan year in which he retires

3. Owner A dies in July of 2016 at age 82.

4. Owner has 5 non spousal beneficiaries

Questions:

1. When does the distribution need to occur by? Is it June 30, 2017, as per the 242(b) election (60 days after end of plan year)?

2. How much needs to be distributed? Is there catch-up distribution required? The rules are confusing but it seems like you only need to catch-up the contributions is the 242(b) is revoked or modified - this 242 was never revoked or modified.

3. Since there are 5 beneficiaries of differing ages ranging from 30-50 years old, how is the first distribution calculated? (they plan on spitting the account up after the first distribution).

[GMK]

maybe this helps:

http://benefitslink.com/boards/index.php/topic/58921-242b-and-rmds/

[MGOAdmin]

I saw that thread before I posted - the references didn't really answer my questions.

Thanks though.

[masteff]

Page 4 here: https://www.irs.gov/pub/irs-wd/0110034.pdf says "A distribution upon death will not be covered by this transition rule unless the information in the designation contains the information ... with respect to the distributions to made upon the death of the employee."

The way I read that, if the 242 designation didn't address it, then you revert to 401(a)(9). Given your question #'s 2 and 3, I suspect the designation didn't address death? Note that you might look at Reg 1-401(a)(9)-8 Q&A-16 as referenced by this PLR on the timing of the first distribution https://www.irs.gov/pub/irs-wd/0510035.pdf But I'll leave it to your judgment on how those references apply to this set of circumstances.