Minimum Distribution at 70-1/2

[Guest Dan Gould]

It seems I may have been under a rock for a while. I just read that the 70-1/2 minimum distribution rule was changed back in 1996 or 1997 to the effect that as long as an employee is still in active service after 70-1/2, there is no age-driven minimum distribution required.

Does that change, if I am understanding it correctly, apply to a Governmental 401(a) plan?

If so, does the change supercede our Plan Document provision requiring that minimum distribution?

If it applies to our Plan, do we have to immediately change the Plan Document to incorporate this change in Federal statute (i.e. is that okay if we wait for some other changes to accumulate, so long as we don't enforce it?)

Thanks

[Carol V. Calhoun]

Yes, it applies to governmental plans. However, the minimum distribution rule imposes only the minimum which is required to be distributed, so a plan rule requiring faster distributions would not be invalidated by it. Thus, you are not required to amend your plan to comply with it. However, if your plan incorporates a distribution schedule which was based on (but did not incorporate by reference) the old 401(a)(9) rules, you could amend it if you wanted to permit longer distributions.

[Guest Dan Gould]

Thanks for the information.