When is the first RMD due & what is the benefit to use

I have not had a noncalendar RMD for DB/CB for many many years so a bit rusty (if a DC, based on 1.401(a)(9)-5, Q&A, based the latest val within the calendar year prior to he distribution due)

Cash balance plan, effective 7/1/2019 with 6/30/2020 year end.

Vesting is 100%  after 3 years and no service prior to 7/1/2019.

Participant who is already over age 71, will be 100% vested at the end of 6/30/2022.

When is the first RMD due, 4/1/2023? What benefit do I have to use?

For example

AB at 6/30/2021 is $1,000/month (0% vested)

AB at 6/30/2022 is $2,000/month (100% vested)

RMD at 12/31/2022 is?

RMD at 4/1/2023 is?

Thank you

What is the participant's date of birth and are they a 5% owner? Impossible to answer without that info.

Hi

Actually have 2 of them

5% owner and August, 1950

5% owner and January, 1947

Thank you

DOB August 1950: after July 1, 1949 so SECURE Act applies. attains age 72 in August 2022. RBD is 4/1/2023.

DOB January 1947: before July 1, 1949 so pre-SECURE Act rules apply. attained age 70-1/2 in July 2017. RBD was 4/1/2018.

If participant is not vested as of their RBD, then that does not affect their RBD; however obviously no benefit can actually be distributed at that date. Benefits must commence as soon as they become vested. If the plan defines the plan year as the vesting computation period then I would say benefits should begin no later than the end of the first plan year during which they become vested. 

I agree with the 1950 DOB. No issues there.

Vesting is 1000 hours during the plan year.

1947 DOB, became a participant on 7/1/19 and will be 100% vested for the plan year beginning 7/1/21 and ending 6/30/22. So the first RMD is due 12/31/2022?

My confusion comes for the following that is applicable to the DC plans

"RMD in a DC plan, based on 1.401(a)(9)-5, Q&A, based the latest val within the calendar year prior to he distribution due".

So for 6/30/21 year end, he will have $2,000/month AB but 0% vesting. As of 6/30/22, he will have $3,000/month AB and 100% vesting.

What do I pay him on 12/31/22, assuming that is his RBD? $2,000/month.

This is so confusing.

Thank you for your input.

I think you are making this more confusing than it needs to be. Why are you looking at the reg for DC plans? It has no application to a DB plan.

Benefits need to commence as soon as he becomes vested after the 4/1/2018 RBD. From what you said that would be at the latest, by 6/30/2022, or more likely, at some point in the middle of the 7/1/2021-6/30/2022 plan year when he completes 1000 hours of service.

The amount that gets paid out is whatever is payable under his elected form of benefit on the benefit commencement date.

One other thing to ask, since the plan started after this RBD, is did the business actually exist during 2017? And if so was he a 5% owner during 2017?

Well, it is confusing to me so thank you for providing some answers. I will look into this further as still not 100% clear on the benefit amount - not worried about the AE that he may elect (getting there though).

To answer your question, in my case, spouse of the owner and yes, the biz has been around for 10+ years. They are just starting a new plan. Good question though for ownership determination.

Appreciate your time.