RMD due or not

[cpc0506]

Employee terminated in 2010.  Employee will turn 70.5 in September 2017.  Employee contacted us, the TPA,  today to initiate a rollover of her account.  Since she is not yet 70.5 can she roll her entire account balance or is she subject to an RMD?  We cannot agree on the answer.

Any guidance you can provide would be helpful.

[Mike Preston]

Is 2017 a distribution calendar year with respect to this participant?  Whoever is arguing for no RMD needs to read he 401(a)(9) regs again and again until they can answer this question.

Once they can answer this question they need to agree to the required RMD.

[K2]

Yes, an RMD is due for 2017.  She can roll over all but that amount.  

[ESOP Guy]

By the way, if the person doesn't want to read the regulations quoted above they could read and read again the plan document.  The RMD section of the document is  pretty much the RMD regulations repeated, but they should be clear also that there is an RMD due in 2017 also. 

[Tom Poje]

here is how I learned

http://www.addletters.com/pictures/bart-simpson-generator/5908406.htm#.WRMOpzbruJA

[RatherBeGolfing]

25 minutes ago, Tom Poje said:

here is how I learned

http://www.addletters.com/pictures/bart-simpson-generator/5908406.htm#.WRMOpzbruJA

 

[My 2 cents]

This is SOOOO much better than reading regulations!!!

[cpc0506]

Can the RMD distribution occur before the terminated participant turns 70.5 or do we have to wait until September to distribute the funds?

[K2]

You do not have to wait.

 

[ESOP Guy]

Back to read the regulations or plan as it is very important here.

What they say is the first dollars distributed to someone in the year they are due an RMD for that year IS THE RMD. 

So not only don't you have to wait to pay the RMD but if you pay him any kind of distribution in 2017 the RMD has to be paid first then the rest of the distribution is paid. 

[My 2 cents]

That means if the person terminates and takes a lump sum rollover, all before reaching 70 1/2 but earlier in the year in which they turn 70 1/2, some of the payout represents an RMD and cannot be part of the rollover.  The year in which the person reaches 70 1/2 is a year with an RMD. 

[AlbanyConsultant]

Sorry to zombify this thread, but I've got a similar situation, except the participant died in December 2017, at age 70 years, 2 months.  Her beneficiary (non-spouse) requested a distribution in January 2018 and the investment product asked about a 2018 RMD because their records show that she would reach age 70.5 in April 2018.  I initially was going to say that death gets her and/or the beneficiary out of the RMD since she never truly reaches her RBD, but that doesn't seem to be the case.

Taxes > Death. 

[ESOP Guy]

The beneficiary has to take an RMD based on their age using the Single life table in 2018 unless they elect the 5 year rule.

The RMD section of your document covers this situation.  If you are using a prototype it might be in the base document but this is covered in it.