Life and Death Planning for Retirement Benefits

Chapter 1: The Minimum Distribution Rules

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of his 403(b) arrangements, and then take the total amount all from one of them or from any combination of them. Reg. § 1.403(b)-6(e)(7) .

Note that IRAs may be aggregated only with other IRAs, and 403(b)s may be aggregated only with other 403(b)s. Reg. § 1.408-8 , A-9, fifth sentence.

D.

Exceptions to IRA/403(b) aggregation rule:

 An individual’s IRAs held as owner may not be aggregated with IRAs he holds as beneficiary ; an individual’s 403(b) plans held as employee may not be aggregated with such individual’s 403(b) plans held as beneficiary. Regs. § 1.408-8 , A-9; § 1.403(b)- 6(e)(7) . For aggregation rules applicable to inherited IRAs and 403(b) plans, see ¶ 1.5.09 .

 Distributions from Roth IRAs will not count towards the RMD requirement for a traditional IRA and vice versa. Reg. § 1.408-8 , A-9, sixth sentence.

 If any part of an IRA or 403(b) account has been “annuitized” (used to purchase an immediate annuity), the annuitized portion becomes subject to the defined benefit plan RMD rules. The non-annuitized portion remains subject to the defined contribution rules and the two portions cannot be aggregated for RMD purposes. Reg. § 1.401(a)(9)-8 , A-3. See ¶ 1.1.05 .

Click here for Q&A regarding taking RMDs from multiple accounts.

Separate accounts within a single plan

A QRP may maintain multiple accounts for a particular employee on the plan books, for example a rollover account, an employer contribution account, and an employee contribution account. These multiple accounts within a single QRP are treated as one account for RMD purposes during the employee’s life. Reg. § 1.401(a)(9)-8 , A-2(a)(1). Thus a distribution from any of these accounts will count towards satisfying the RMD requirement for the employee’s total combined interest in the plan. Though a single retirement plan account or IRA payable to multiple beneficiaries can be divided into “separate accounts” (each payable to a different beneficiary) for RMD purposes after the owner’s death ( ¶ 1.8.01 ), separate accounts treatment for portions payable to different beneficiaries is apparently not available for RMD purposes during the participant’s life. Thus, it is not possible to use the much-younger-spouse method to calculate the RMD for the fractional portion of the account of which the spouse is the beneficiary if she is not the sole beneficiary of the participant’s entire account in the plan. See Reg. § 1.401(a)(9)-8 , A-2(a)(2), first sentence.

1.4 The RBD and First Distribution Year