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Posted

Single-employer defined benefit plan is terminating this year.  The plan is distributing the assets through the purchase of annuities from an insurance company for those participants who don't take a lump sum at termination. Participants can elect an immediate annuity that will commence benefit payments right away, or they can elect a deferred annuity and can commence benefit payments any time after plan termination - even if they are still employed by the company at the time they elect to begin benefit payments.

The plan currently has an RMD provision that does not require distributions until the later of age 72 and termination of employment.  Does that rule continue to apply after the plan is terminated to the participants who receive a deferred annuity?

In other words, does the insurance company have to verify employment status witht the plan sponsor for those annuitants who are 72 or older to begin RMDs, or does the participant's employment status not matter for purposes of RMDs under Section 401(a)(9) once the plan is terminated (or RMDs don't apply at all)?

Posted

It's no longer in a qualified retirement plan once the annuity is purchased so employment status will be irrelevant. Contacts will need to comply with 401(a)(9).

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