RMD Question

[Dougsbpc]

We administer a small traditional defined benefit plan that covers the company owner and his spouse.

He is now of the age that he needs to take an RMD.

I know there are many different ways to make the RMD as low as possible but in this case he is not looking for that.

Suppose he wants to take the RMD calculated as an annual annuity and take his first RMD on 11/15/2024 (He could wait until 4/1/2025 but does not want to). Suppose the pre and post interest rate in the document is 5%. Furthermore, his monthly accrued benefit is $15,000.

1. Is it acceptable to calculate the annual RMD as follows?         $15,000 X 12.05 = $180,750?

2. Suppose he takes his first RMD on 11/15/2024. Suppose they terminate the plan 3/1/2025 and all assets are distributed 5/15/2025. Since one year from 11/15/2024 would be 11/15/2025, must he take an RMD when all assets are paid from the plan on 5/15/2025?

Thanks!

[CuseFan]

To satisfy RMD he can commence his monthly benefit or he could, if plan allows, elect a lump sum which could either be the equivalent of 12 monthly payments or treating the LS as a DC balance. I do not think you can lump in monthly annuity payments with interest into a single installment unless the plan permits, but I'll defer to other opinions on that.

2024 is his first distribution calendar year. Regardless of how/when he commenced RMDs, unless he takes lump sum in 2024, split between RMD and a rollover, he will have a 2025 distribution calendar year RMD no matter when the plan is terminated and assets distributed. If he does aforementioned 2024 split lump sum, he'll have an IRA RMD for 2025 attributable to the 2024 rollover.