PS58 part of RMD?

[drakecohen]

Accountant posed this question and could not find anything definitive as to an answer.

One-participant Defined Contribution Plan with life insurance and participant over age 70-1/2. For simplicity let's say:

12/31/15 account balance: $100,000 (including cash value of life insurance)

Payout factor: 22.9

PS58 cost: $200

2016 RMD $4,367 ($100,000 / 22.9)

Does the participant need to get a check for $4,367 during 2016 or $4,167 with the other $200 covered by the PS58 cost?

[Belgarath]

Interesting question. I'm going to vote for the $4,367. The taxable terms cost is not an actual distribution of plan assets - it is, rather, a taxable "economic benefit" to the participant.

[Bird]

Agree, $4,367 must be distributed.

[CMarkB]

Agreed. See Treas. Reg. Section 1.401(a)(9)-5, Q&A-9(b)(6) providing P.S. 58 costs are not included for purposes of determining the RMD.