When is the RMD due?

Hi

Company A had a DB plan which terminated 12 years ago and paid out all during that time - it was PBGC termination.

They started a new CB plan effective 7/1/2019 with plan year ending 6/30/2020.

Vesting service started with the inception date i.e. 7/1/2019. It is 3 year cliff.

Owner's spouse was in the old plan and had been working however without any salary for the past 10+ years.

Suddenly, they decided to include the spouse effective with 7/1/2020 plan year. Did the amendments and even added a special eligibility clause to add him effective 7/1/2020, just in case.

The DOB is 7/15/1950.

When is his first RMD due?

Thank you for your comments.

He will attain age 72 on 7/15/2022. Assuming he is a 5% owner during the plan year ending 6/30/2022, then his first distribution calendar year is 2022 and his RBD is 4/1/2023.

I agree but is he 100% vested based on the information I provided?

He is 5% owner by attribution to the owner aka spouse.

Why wouldn't he be 100% vested?

This is where I get a bit confused. No payroll for 10+ years though working, is that considered as working i.e. break-in-service?

I am not sure about the hours he works, could be less than 500.

Assuming he worked enough hours each year to earn a year of service (also assuming that the plan uses the counting hours method for vesting, and that the vesting computation period is the plan year, and that there are no predecessor plan issues, and that he has not reached his normal retirement date under the plan, etc, etc)

7/1/19 - 6/30/20: 1 year

7/1/20 - 6/30/21: 2 years

7/1/21 - 6/30/22: 3 years

Looks to me like he will be fully vested before his RBD regardless of any break in service rules.

Based on your calculations which assumed that his prior years of service is not included, his initial date of employment is 7/1/2020. The plan started in 7/1/2019 and he was not on the payroll for the 2019 year.

He has not reached NRA which is 65 and 5 YOP which would make is 7/1/2025.

17 hours ago, Jakyasar said:

Owner's spouse was in the old plan

I don't think you can ignore that prior service or start the vesting clock anew for the new CBP, at least for anyone who was in the prior plan.

Doesn't it depend on whether the old plan is a predecessor plan with respect to the new plan?

This is where I am questioning myself on the break-in-service issues since there was no payroll and possibly worked less than 501 hours annually (what if worked over 501 hours annually).

Yes, this is a predecessor plan as the old db was under the same EIN/sponsor.

Sorry for all these questions as I have never encountered this in the past and trying to understand on how to apply the past 12 years where this person never had a compensation.

This is strictly for vesting purposes. Still not clear if all prior service should be counted which in this case, I would agree with CB Zeller on the vesting.

Predecessor plan does not mean just any other plan sponsored by the same employer. It has a specific definition and a particular impact on vesting service. You should read the 411 regs to get a better understanding of the rule and see how it applies in this case. You said the old plan terminated 12 years ago so it might not be a predecessor plan. Have there been any other plans during that time?

Only a dc plan which is still active.

 I am aware of the definition of predecessor plan but will look further into it. However it has always been my knowledge that, once in a db plan that was terminated, the offset always follows you except for a few exceptions. I do not see the old db plan is not a predecessor plan.

 I am still confused about the employment and vesting credit though.

35 minutes ago, Jakyasar said:

I do not see the old db plan is not a predecessor plan.

??

Sorry, my keyboard played a trick on me.

I do not see how the old db plan is not a predecessor plan.

Thanks for pointing out.

As I think it's been suggested before you need to look up the definition.