RMD for terminated plan 2019

[Dennis G.]

I need some guidance on an RMD for 2020 for a terminated defined benefit pension plan.  The plan year end was 9/30/19.  As of 9/30/2019 the plan held assets that produced a $100K RMD for 2020.

However in October 2019, the plan sponsor (1 man plan) rolled the remainder of the DB assets to his IRA.

I know that under CARES DCs and IRAs can waive RMDs for 2020.  But what about this situation?  Does he need to take the $100K from the IRA to satisfy the RMD requirement for the DB Plan for 2020?

I'm sure the CPA will be asking for a reference to the answer.  Any help is appreciated.

[Lou S.]

If the DB plan had a pending RMD then that is not eligible for rollover to the IRA. The CARES Act did nothing to change that for DB plans. Did he already satisfy his RMD for 2019? If so he might not have a 2020 RMD as he paid out the assets in 2019.

[Mike Preston]

Oy vey

[RatherBeGolfing]

13 hours ago, Mike Preston said:

Oy vey

I'm going to cite this in my next footnote...

[Dennis G.]

The 1 man plan participant in the DB did take his 2019 RMD prior to 9/30/2019. As I said he rolled the remainder of the DB assets into an IRA in October 2019.

 

[Larry Starr]

On 7/31/2020 at 1:52 PM, Dennis G. said:

The 1 man plan participant in the DB did take his 2019 RMD prior to 9/30/2019. As I said he rolled the remainder of the DB assets into an IRA in October 2019.

 

Assuming the payout was correct in 2019, I don't see an issue.

The 2019 RMD was done.  The plan terminated as was converted into a DC account (an IRA) by 12/31/19.  

For 2020, the RMD would be determined based on DC rules using the 12/31/19 balance. The DB influence has disappeared.

Since the 2020 RMD doesn't exist, no distribution needs to be made in 2020.  Assuming they don't again change the rules, the 12/31/20 balance will be used to determine the RMD required for 2021.

Does anybody see it differently?

Larry.

[Mike Preston]

22 hours ago, Dennis G. said:

As of 9/30/2019 the plan held assets that produced a $100K RMD...

Repeat... Oy vey

[Larry Starr]

10 minutes ago, Mike Preston said:

Repeat... Oy vey

That's what happens when you have a 90 year old getting an RMD!?

Can you embellish as to WHY the "Oy vey"?

Larry

[Mike Preston]

What do assets have to do with a DB rmd?

[Larry Starr]

22 hours ago, Mike Preston said:

What do assets have to do with a DB rmd?

I think this quote from the OP answers that question: As I said he rolled the remainder of the DB assets into an IRA in October 2019.

So, the DB terminated, an RMD was paid, the remainder of the lump sum distribution was rolled to an IRA in 2019.  So, in 2020 only a DC RMD was in play.  NO? And as I recall, THAT does have something to do with the assets?

 

[Mike Preston]

I'm from Missouri on this one. If the defined-benefit rmd wasn't properly calculated, the rollover is tainted. You can do what you want with the DC rmd at that point. If the defined benefit rmd is correct then your analysis is of course correct.

[Larry Starr]

21 hours ago, Mike Preston said:

I'm from Missouri on this one. If the defined-benefit rmd wasn't properly calculated, the rollover is tainted. You can do what you want with the DC rmd at that point. If the defined benefit rmd is correct then your analysis is of course correct.

OK; of course.

[Dennis G.]

As the author of the original post, to clarify, this is a one man plan with all assets attributable to accumulation as a Defined Benefit Plan asset.  The 1 man participant took his RMD due him for 2019 before 9/30/2019, plan year end.  In October 2019 the plan transferred the remainder of the DB assets to an IRA.  Perhaps the better question is did the DB Plan produce an RMD requirement for 2020 because it held assets as of 9/30/2019?

[Mike Preston]

From what you're saying, you still don't get it. Maybe somebody else will explain it to you.

[Larry Starr]

On 8/6/2020 at 7:20 PM, Dennis G. said:

As the author of the original post, to clarify, this is a one man plan with all assets attributable to accumulation as a Defined Benefit Plan asset.  The 1 man participant took his RMD due him for 2019 before 9/30/2019, plan year end.  In October 2019 the plan transferred the remainder of the DB assets to an IRA.  Perhaps the better question is did the DB Plan produce an RMD requirement for 2020 because it held assets as of 9/30/2019?

Go back and re-read my 7/31 posting. It tells you exactly what the answer is. And just to state the obvious again, there is no 2020 RMD for ANYONE IN THE COUNTRY, and if the RMD rules were still in effect, there was an IRA at 12/31/19 (not a DB plan) which would determine the RMD for 2020.  Anything not clear there?