QDRO and RMD Calculation

QDRO filed in 2022.  Separate 401k account established.  The alternate payee (former spouse) is required to take the first RMD based on the participant reaching 73 this year, 2026.  As I understand it, Treasury Regulations designate the Universal Life table for the calculation of the RMD.  Fidelity has calculated the RMD using the Single Life Table.  

Eleven days after requesting clarification, Fidelity has continued to refuse to offer further explanation except to say “we have done the calculation and we’re not changing it.” Followed later in the conversation with “if you do not take the distribution voluntarily, you will be forced to take it.”

Am I destined to loose this argument? Can they actually do this? Am I missing something and I am actually in the wrong?

I assume the participant had a 401(k) plan.  

To what type of plan did the alternate payee transfer his/her interest?  To his/her exiting eligible retirement account that happened to be a 401(k)?

Why not suggest to the alternate payee that he/she move his/her account to an IRA so he/she will be happy.  

On top of the foregoing, I am pretty sure the Fidelity table is a single life annuity.

 https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/UniformLifetimeTable.pdf

Table I (Single Life Expectancy) is used for beneficiaries who are not the spouse of the IRA owner - whatever that means, and your client is not the spouse.

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds

So it may be that one time in the history of the universe Fidelity is right.  

David

The rule for QDROs and RMDs is odd.  See https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFR6f8c3724b50e44d/section-1.401(a)(9)-8#p-1.401(a)(9)-8(d)(2).  YOu would think that once in a separate account it would be treated as the alternative payee's, but for RMD purposes it isn't.  don't know why but that is what the Reg says.  The alternate payee should consider @fmsinc's suggestion and roll the account balance into an IRA or she may be subject to this same RMD treatment next year, etc.  That said, probably won't help with this year as the amount that is required to be an RMD this year normally cannot be rolled over.  So, there likely would be two 1099-Rs issued, one with the RMD non-eligible rollover amount and one with the remaining eligible rollover amount.