DB RMD - when is it due?

[Jakyasar]

Hi

My very first age 72 RMD.

Turned 72 in September 2022, when is my first RMD due from the DB plan?

Is the AB based on 12/31/2021 AB if starting 4/1/2023?

If participant wants 2022 RMD and withdraws in December 2022, can he receive annual lump sum by 12/31/2022?

Thank you

[C. B. Zeller]

9 hours ago, Jakyasar said:

Turned 72 in September 2022, when is my first RMD due from the DB plan?

Assuming this is a 5% owner, since there is no mention of retirement date. If they attained age 72 in 2022 then required beginning date is 4/1/2023.

9 hours ago, Jakyasar said:

Is the AB based on 12/31/2021 AB if starting 4/1/2023?

If you commence benefits on 4/1/2023 then the amount distributed is the participant's benefit as of 4/1/2023. To adjust the benefit calculated as of the 12/31/2022 (I assume you meant 2022) valuation to 4/1/2023, refer to the plan's definition of actuarial equivalence.

9 hours ago, Jakyasar said:

If participant wants 2022 RMD and withdraws in December 2022, can he receive annual lump sum by 12/31/2022?

If allowed by the plan. If he takes a distribution of his entire benefit as a lump sum in 2022 then he can use the DC method to calculate the portion of the distribution that is an RMD and roll over the rest. Be mindful of the rule that requires the plan to be 110% funded for an HCE to take a lump sum.

[Jakyasar]

Thank you

A follow question.

Facts: The plan covers the owner (the daughter - 100% owner) plus her father and mother as the employees.

Mom is the participant who turned age 72 in 2022, again no ownership, just an employee.

Does mom need to get the RMD? She is an HCE/key by family attribution.

Thank you

[Bri]

Yes, attributed stock counts.

[CuseFan]

4 hours ago, C. B. Zeller said:

If allowed by the plan. If he takes a distribution of his entire benefit as a lump sum in 2022 then he can use the DC method to calculate the portion of the distribution that is an RMD and roll over the rest. Be mindful of the rule that requires the plan to be 110% funded for an HCE to take a lump sum.

That sounds familiar, we were just there! Funny.

[Jakyasar]

13 hours ago, C. B. Zeller said:

If you commence benefits on 4/1/2023 then the amount distributed is the participant's benefit as of 4/1/2023. To adjust the benefit calculated as of the 12/31/2022 (I assume you meant 2022) valuation to 4/1/2023, refer to the plan's definition of actuarial equivalence.

What if the 2022 valuation is not done i.e. no info available as of 4/1/2023?

[FT Retire]

See the attached Case of the Week: Required Minimum Distributions and More Than 5% Owners | National Association of Plan Advisors (napa-net.org)

                                                               

[C. B. Zeller]

12 hours ago, Jakyasar said:

What if the 2022 valuation is not done i.e. no info available as of 4/1/2023?

Then you inform the client that they need to get you whatever information is required for you to accurately calculate their benefit before the RBD if they want to avoid a disqualifying failure, and fines.

[Jakyasar]

Thank you all, happy txgiving