Required Beginning Date for Cash Balance Plan

[emmetttrudy]

It is my understanding that the Required Beginning Date is the date by which a participant must take his RMD. If the person chooses, he can take his RMD earlier, correct? He does not have to take it on the RBD?

For example, if the RBD = 4/1/2018 but the participant wants to take his RMD prior to 1/1/2018, so it affects his 2017 taxable year, he could. Is this correct?

This is for a Cash Balance Plan, not a DC Plan.

Thanks.

[CuseFan]

I think it depends on the terms of the Plan. if this is an owner who is still employed/active, unless the Plan allows for in-service distribution after NRA (or age 62 if applicable), I don't think you have a distributable event until the RBD. If the person is separated, no problem. If not, and that language isn't in the Plan it can be amended. Also, the Plan could (if it has the provisions) commence the minimum annuity (50% J&S) beginning 4/1 and then provide a new annuity starting date upon actual retirement and allow a lump sum election if desired.

[Lou S.]

Just to be clear a Cash Balance plan needs to satisfy the DB RMD rules not the DC RMD rules.

CuseFan has a nice summary above.

[emmetttrudy]

OK - I think my original question partly relied on what is considered the distributable event. It sounds like just turning 70.5 is not considered a distributable event, but getting to the RBD does trigger a distributable event?

So, let's assume the Plan does have an in-service distribution provision (at age 62, or at NRA age 65), then the participant could choose to elect a distribution prior to the 4/1 RBD, and this isn't necessarily because they are 70.5, but rather because they're otherwise eligible for a distribution under a different provision in the plan?

 

[Calavera]

On ‎5‎/‎2‎/‎2017 at 5:19 PM, emmetttrudy said:

let's assume the Plan does have an in-service distribution provision (at age 62, or at NRA age 65), then the participant could choose to elect a distribution prior to the 4/1 RBD

Yes. I assume person in question would be a top-25 paid participant. Therefore, be sure plan is at least 110% funded on a post-distribution basis if this participant takes a lump sum.