IRA and Annuity Distributions - Regulation §1.401(a)(9)-1

This is the text of IRS Regulation §1.401(a)(9)-1

Required minimum distribution requirement in general

[There are two versions of 1.401(a)(9)-1. The first version is proposed to

be effective as of January 1, 2002, but can relied on for 2001. The second

version, which appears below the first version, can be relied on through

2001. ]

Q-1. What plans are subject to the required minimum distribution

requirement under section 401(a)(9) and Secs. 1.401(a)(9)-1 through

1.401(a)(9)-8?

A-1. All stock bonus, pension, and profit-sharing plans qualified under

section 401(a) and annuity contracts described in section 403(a) are

subject to the required minimum distribution rules in section 401(a)(9)

and Secs. 1.401(a)(9)-1 through 1.401(a)(9)-8. See Sec. 1.403(b)-2 for the

distribution rules applicable to annuity contracts or custodial accounts

described in section 403(b), see Sec. 1.408-8 for the distribution rules

applicable to individual retirement plans, see Sec. 1.408A-6 described for

the distribution rules applicable to Roth IRAs under section 408A, and see

section 457(d)(2)(A) for distribution rules applicable to certain deferred

compensation plans for employees of tax exempt organizations or state and

local government employees.

Q-2. Which employee account balances and benefits held under qualified

trusts and plans are subject to the distribution rules of section

401(a)(9) and Secs. 1.401(a)(9)-1 through 1.401(a)(9)-8?

A-2. The distribution rules of section 401(a)(9) apply to all account

balances and benefits in existence on or after January 1, 1985. Sections

1.401(a)(9)-1 through 1.401(a)(9)-8 apply for purposes of determining

required minimum distributions for calendar years beginning on or after

January 1, 2002.

Q-3. What specific provisions must a plan contain in order to satisfy

section 401(a)(9)?

A-3.

(a) REQUIRED PROVISIONS. In order to satisfy section 401(a)(9), the

plan must include several written provisions reflecting section

401(a)(9). First, the plan must generally set forth the statutory

rules of section 401(a)(9), including the incidental death benefit

requirement in section 401(a)(9)(G). Second, the plan must provide

that distributions will be made in accordance with Secs. 1.401(a)(9)-

1 through 1.401(a)(9)-8. The plan document must also provide that the

provisions reflecting section 401(a)(9) override any distribution

options in the plan inconsistent with section 401(a)(9). The plan

also must include any other provisions reflecting section 401(a)(9)

as are prescribed by the Commissioner in revenue rulings, notices,

and other guidance published in the Internal Revenue Bulletin. See

Sec. 601.601(d)(2)(ii)(b) of this chapter.

(b) OPTIONAL PROVISIONS. The plan may also include written provisions

regarding any optional provisions governing plan distributions that

do not conflict with section 401(a)(9) and the regulations

thereunder.

after an employee's death will be required to be made under the

default provision set forth in Sec. 1.401(a)(9)-3 for distributions

unless the plan document contains optional provisions that override

such default provisions. Thus, if distributions have not commenced to

the employee at the time of the employee's death, distributions after

the death of an employee are to be made automatically in accordance

with the default provisions in A-4(a) of Sec. 1.401(a)(9)-3 unless

the plan either specifies in accordance with A-4(b) of Sec.

1.401(a)(9)-3 the method under which distributions will be made or

provides for elections by the employee (or beneficiary) in accordance

with A-4(c) of Sec. 1.401(a)(9)-3 and such elections are made by the

employee or beneficiary.

[66 FR 3928, January 17, 2001]

SECTION 1.401(a)(9)-1 Required distributions from trusts and plans.

Section 1.401(a)(9)-1, as proposed to be added at 52 FR 28075, July 27,

1987, is amended by:

1. Revising Q&A D-5

2. Revising Q&A D-6.

3. Adding Q&A D-7

The additions and revisions read as follows:

* * * * *

D. DETERMINATION OF THE DESIGNATED BENEFICIARY.

* * * * *

D-5.--

Q. If a trust is named as a beneficiary of an employee, will the

beneficiaries of the trust with respect to the trust's interest in the

employee's benefit be treated as having been designated as beneficiaries

of the employee under the plan for purposes of determining the

distribution period under section 401(a)(9)(A)(ii)?

A.--

(a) Pursuant to D-2A of this section, only an individual may be a

designated beneficiary for purposes of determining the distribution period

under section 401(a)(9)(A)(ii). Consequently, a trust itself may not be

the designated beneficiary even though the trust is named as a

beneficiary. However, if the requirements of paragraph (b) of this D-5 are

met, distributions made to the trust will be treated as paid to the

beneficiaries of the trust with respect to the trust's interest in the

employee's benefit, and the beneficiaries of the trust will be treated as

having been designated as beneficiaries of the employee under the plan for

purposes of determining the distribution period under section

401(a)(9)(A)(ii). If, as of any date on or after the employee's required

beginning date, a trust is named as a beneficiary of the employee and the

requirements in paragraph (b) of this D-5A are not met, the employee will

be treated as not having a designated beneficiary under the plan for

purposes of section 401(a)(9)(A)(ii). Consequently, for calendar years

beginning after that date, distribution must be made over the employee's

life (or over the period which would have been the employee's remaining

life expectancy determined as if no beneficiary had been designated as of

the employee's required beginning date).

(b) The requirements of this paragraph (b) are met if, as of the later of

the date on which the trust is named as a beneficiary of the employee, or

the employee's required beginning date, and as of all subsequent periods

during which the trust is named as a beneficiary, the following

requirements are met:

(1) The trust is a valid trust under state law, or would be but for

the fact that there is no corpus.

(2) The trust is irrevocable or will, by its terms, become

irrevocable upon the death of the employee.

(3) The beneficiaries of the trust who are beneficiaries with respect

to the trust's interest in the employee's benefit are identifiable

from the trust instrument within the meaning of D-2 of this section.

(4) The documentation described in D-7 of this section has been

provided to the plan administrator.

see E-5 of this section for the rules for determining the designated

beneficiary whose life expectancy will be used to determine the

distribution period. If the beneficiary of the trust named as beneficiary

is another trust, the beneficiaries of the other trust will be treated as

having been designated as beneficiaries of the employee under the plan for

purposes of determining the distribution period under section

401(a)(9)(A)(ii), provided that the requirements of paragraph (b) of this

D-5A are satisfied with respect to such other trust in addition to the

trust named as beneficiary.

D-6.--

Q. If a trust is named as a beneficiary of an employee, will the

beneficiaries of the trust with respect to the trust's interest in the

employee's benefit be treated as designated beneficiaries under the plan

with respect to the employee for purposes of determining the distribution

period under section 401(a)(9)(B)(iii) and (iv)?

A.--

(a) If a trust is named as a beneficiary of an employee and the

requirements of paragraph (b) of D-5A of this section are satisfied as of

the date of the employee's death or, in the case of the documentation

described in D-7 of this section, by the end of the ninth month beginning

after the employee's date of death, then distributions to the trust for

purposes of section 401(a)(9) will be treated as being paid to the

appropriate beneficiary of the trust with respect to the trust's interest

in the employee's benefit, and all beneficiaries of the trust with respect

to the trust's interest in the employee's benefit will be treated as

designated beneficiaries of the employee under the plan for purposes of

determining the distribution period under section 401(a)(9)(B)(iii) and

(iv). If the beneficiary of the trust named as beneficiary is another

trust, the beneficiaries of the other trust will be treated as having been

designated as beneficiaries of the employee under the plan for purposes of

determining the distribution period under section 401(a)(9)(B)(iii) and

(iv), provided that the requirements of paragraph (b) of D-5A of this

section are satisfied with respect to such other trust in addition to the

trust named as beneficiary. If a trust is named as a beneficiary of an

employee and if the requirements of paragraph (b) of D-5A of this section

are not satisfied as of the dates specified in the first sentence of this

paragraph, the employee will be treated as not having a designated

beneficiary under the plan. Consequently, distribution must be made in

accordance with the five-year rule in section 401(a)(9)(B)(ii).

(b) The rules of D-5 of this section and this D-6 also apply for purposes

of applying the provisions of section 401(a)(9)(B)(iv)(II) if a trust is

named as a beneficiary of the employee's surviving spouse. In the case of

payments to a trust having more than one beneficiary, see E-5 of this

section for the rules for determining the designated beneficiary whose

life expectancy will be used to determine the distribution period.

D-7.--

Q. If a trust is named as a beneficiary of an employee, what documentation

must be provided to the plan administrator so that the beneficiaries of

the trust who are beneficiaries with respect to the trust's interest in

the employee's benefit are identifiable to the plan administrator?

A.--

(a) REQUIRED DISTRIBUTIONS COMMENCING BEFORE DEATH. In order to satisfy

the requirement of paragraph (b)(4) of D-5A of this section for

distributions required under section 401(a)(9) to commence before the

death of an employee, the employee must comply with either paragraph

(a)(1) or (2) of this D-7A:

(1) The employee provides to the plan administrator a copy of the

trust instrument and agrees that if the trust instrument is amended

at any time in the future, the employee will, within a reasonable

time, provide to the plan administrator a copy of each such

amendment.

(2) The employee--

(i) Provides to the plan administrator a list of all of the

beneficiaries of the trust (including contingent and

remainderman beneficiaries with a description of the conditions

on their entitlement);

(ii) Certifies that, to the best of the employee's knowledge,

this list is correct and complete and that the requirements of

paragraphs (b)(1), (2), and (3) of D-5A of this section are

satisfied;

(iii) Agrees to provide corrected certifications to the extent

that an amendment changes any information previously certified;

and

(iv) Agrees to provide a copy of the trust instrument to the

plan administrator upon demand.

(b) REQUIRED DISTRIBUTIONS AFTER DEATH. In order to satisfy the

documentation requirement of this D-7 for required distributions after

death, by the end of the ninth month beginning after the death of the

employee, the trustee of the trust must either

(1) Provide the plan administrator with a final list of all of the

beneficiaries of the trust (including contingent and remainderman

beneficiaries with a description of the conditions on their

entitlement) as of the date of death; certify that, to the best of

the trustee's knowledge, this list is correct and complete and that

the requirements of paragraph (b)(1), (2), and (3) of D-5A of this

section are satisfied as of the date of death; and agree to provide a

copy of the trust instrument to the plan administrator upon demand;

(2) Provide the plan administrator with a copy of the actual trust

document for the trust that is named as a beneficiary of the employee

under the plan as of the employee's date of death.

CERTIFICATIONS OR EARLIER TRUST INSTRUMENTS.--

(1) If required distributions are determined based on the information

provided to the plan administrator in certifications or trust

instruments described in paragraph (a)(1), (a)(2) or (b) of this D-

7A, a plan will not fail to satisfy section 401(a)(9) merely because

the actual terms of the trust instrument are inconsistent with the

information in those certifications or trust instruments previously

provided to the plan administrator, but only if the plan

administrator reasonably relied on the information provided and the

minimum required distributions for calendar years after the calendar

year in which the discrepancy is discovered are determined based on

the actual terms of the trust instrument. For purposes of determining

whether the plan satisfies section 401(a)(9) for calendar years after

the calendar year in which the discrepancy is discovered, if the

actual beneficiaries under the trust instrument are different from

the beneficiaries previously certified or listed in the trust

instrument previously provided to the plan administrator, or the

trust instrument specifying the actual beneficiaries does not satisfy

the other requirements of paragraph (b) of D-5A of this section, the

minimum required distribution will be determined by treating the

beneficiaries of the employee as having been changed in the calendar

year in which the discrepancy was discovered to conform to the

corrected information and by applying the change in beneficiary

provisions of E-5 of this section.

(2) For purposes of determining the amount of the excise tax under

section 4974, the minimum required distribution is determined for any

year based on the actual terms of the trust in effect during the

year.

* * * * *

[62 FR ___, December 17, 1997]

There are added sections 1.401(a)(9)-1 and 1.401(a)(9)-2 after section

1.401(a)-2 to read as follows:

The following questions and answers relate to the distribution rules for

qualified plans provided in section 401(a)(9) of the Internal Revenue Code

of 1986 and section 401(a)(9) of the Internal Revenue Code of 1954, as

amended by section 521 of the Tax Reform Act of 1984 (Pub. L. 98-369) (TRA

of 1984) and by section 1121 and 1852 of the Tax Reform Act of 1986 (TRA

of 1986) (Pub. L. 99-514):

TABLE OF CONTENTS

A. In general.

B. Distributions commencing before an employee's death.

C. Distributions commencing after an employee's death.

D. Determination of the designated beneficiary.

E. Determination of life expectancy.

F. Determination of the amount which must be distributed each year.

G. Rollovers and transfers.

H. Special rules.

I. Transitional rules.

J. Election under section 242(b)(2) of TEFRA.

A. IN GENERAL

A-1. Q. What plans are subject to the new distribution rules in section

401(a)(9) of the Internal Revenue Code of 1986, as amended by section 521

of the Tax Reform Act of 1984, and by sections 1121 and 1852 of the Tax

Reform Act of 1986, and the regulations thereunder?

A. All stock bonus, pension, and profit-sharing plans qualified under

section 401(a) and annuity contracts described in section 403(a) are

subject to the distribution rules in section 401(a)(9) of the Internal

Revenue Code of 1986 and section 401(a)(9) of the Internal Revenue Code of

1954 as amended by section 521 of the Tax Reform Act of 1984 (TRA of

1984), and by sections 1121 and 1852 of the Tax Reform Act of 1986 (TRA of

1986) and the regulations thereunder. See section 1.403(b)-2 for the

distribution rules applicable to annuity contracts or custodial accounts

described in section 403(b), and see section 1.408-8 for the distribution

rules applicable to individual retirement plans described in section 408.

See also section 457(d)(2)(A) for distribution rules applicable to certain

deferred compensation plans.

A-2. Q. Which employee account balances and benefits held under qualified

trusts and plans are subject to the distribution rules of section

401(a)(9) of the Internal Revenue Code of 1986 and section 401(a)(9) of

the Internal Revenue Code of 1954, as amended?

A. The distribution rules of section 401(a)(9) of the Internal Revenue

Code of 1986 and 401(a)(9) of the Internal Revenue Code of 1954, as

amended, apply to all account balances and benefits in existence on or

after January 1, 1985. The new rules apply to such balances and benefits

even though the employee has retired or died, or distributions have

commenced prior to that time. However, section 521(e)(4) and (5) of TRA of

1984 provided delayed effective dates for governmental plans and plans

maintained pursuant to collective bargaining agreements. Also see J-1

through J-5 concerning designations made pursuant to section 242(b)(5) of

the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA).

A-3. Q. What specific provisions must a plan contain in order to satisfy

section 401(a)(9)?

A.--

(a) REQUIRED PROVISIONS. In order to satisfy section 401(a)(9), the plan

must include several written provisions reflecting section 401(a)(9).

First, the plan must generally set forth the statutory rules of section

401(a)(9), including the incidental death benefit requirement in section

401(a)(9)(G). Second, the plan must provide that distributions will be

made in accordance with the regulations under section 401(a)(9), including

section 1.401(a)(9)-2. The plan document must also provide that the

provisions reflecting section 401(a)(9) override any distribution options

in the plan inconsistent with section 401(a)(9). Finally, the plan must

include any other provisions reflecting section 401(a)(9) as are

prescribed by the Commissioner.

(b) OPTIONAL PROVISIONS. The plan may also include written provisions

regarding any optional provisions governing plan distributions that do not

conflict with section 401(a)(9) and the regulations thereunder.

(1) Plan distributions will be required to be made under the default

provisions set forth in this section unless the plan document

contains optional provisions that override such default provisions.

(2) For example, if distributions have not commenced to the employee

at the time of the employee's death, distributions after the death of

an employee are to be made automatically in accordance with the

default provisions in C-4(a) unless the plan either (i) specifies in

accordance with C-4(b) the method under which distributions will be

made or (ii) provides for elections by the employee (or beneficiary)

(in accordance with C-4(c)) and such elections are made by the

employee or beneficiary.

(3) Similarly, life expectancies of employees and spouses of

employees automatically will be recalculated pursuant to E-7(a)

unless the plan either (i) specifies in accordance with E-7(b) that

life expectancies of employees and spouses of employees will not be

recalculated or (ii) provides for elections by the employee (or

spouse) in accordance with E-7(c) (in which case life expectancy will

not be recalculated if there is such an election or if a plan default

provision so provides).

A-4. Q. When must plans be amended to satisfy section 401(a)(9) and how

must they operate prior to such amendment?

A.--

(a) FORM REQUIREMENTS BEFORE 1989. A plan will not be disqualified solely

because it is not amended for section 401(a)(9) and the regulations

thereunder prior to the end of the amendment period contained in section

1140 of TRA of 1986 if the plan amendments are adopted retroactively to

the effective date of section 401(a)(9) and the regulations thereunder.

(b) OPERATIONAL REQUIREMENTS BEFORE 1989. For plan years beginning in

calendar years after 1984, a plan must satisfy section 401(a)(9) and the

applicabl regulations in operation in order to meet the qualification

requirements of section 401(a). Therefore, distributions for calendar

years after 1984 must be made in accordance with the provisions of section

401(a)(9) and the regulations thereunder notwithstanding any provisions of

the plan to the contrary. For plan years before the plan year in which the

plan is required to be amended pursuant paragraph (a), the plan will not

fail to satisfy either the requirement that a plan be operated in

accordance with its terms or the requirement that a pension plan provide

definitely determinable benefits (or the requirement that a profit-sharing

plan provide a definite predetermined formula for distributing the funds

accumulated under the plan) merely because distributions are made to

comply with section 401(a)(9) and the regulations thereunder rather than

in accordance with the terms of the plan.

plan year in which the plan is required to be amended pursuant to

paragraph (a), notwithstanding A-3(b), a plan will not be subject to the

default provisions in this section if benefits are distributed in

accordance with this section in a reasonable and consistent manner. For

example, for purposes of determining pursuant to C-4 whether the five-year

rule in section 401(a)(9)(B)(ii) or the exception to the five-year rule in

section 401(a)(9)(B)(iii) and (iv) applies, a plan does not have to make

distributions in accordance with the default provisions in C-4(a) if the

plan administrator establishes a consistent policy of either (1)

distributing benefits under one method or the other or (2) distributing

benefits pursuant to an election by an employee or beneficiary (or in the

absence of an election under one method or the other). Similarly, for

purposes of determining whether or not the life expectancies of an

employee and the employee's spouse will be recalculated pursuant to

section 401(a)(9)(D) and E-7, a plan does not have to recalculate life

expectancies of employees or their spouses if the plan administrator

establishes a policy of either not recalculating such life expectancies or

of allowing elections by employees or spouses. In the latter case, a plan

does not have to recalculate the employee or the employee's spouse's life

expectancy if the employee or spouse elects not to recalculate life

expectancy (or in the absence of an election, of not recalculating life

expectancies). However, if a plan administrator adopts a policy of not

distributing in accordance with one of the default provisions, when the

plan is amended to comply with section 401(a)(9), the amendment must be

consistent with the policy established.

A-5. Q. To what extent will a plan be treated as failing to satisfy the

qualification requirements of section 401(a) if the plan in operation

fails to make distributions in accordance with section 401(a)(9)?

A. A plan will not satisfy the qualification requirements of section

401(a) with respect to a plan year unless all distributions required under

section 401(a)(9) are made for the calendar year ending with or within

such plan year. Notwithstanding the preceding sentence, for plan years

beginning after December 31, 1988, a plan will not fail to satisfy the

qualification requirements of section 401(a) because there are isolated

instances when the minimum distribution requirements of section 401(a)(9)

are not satisfied in operation. However, a pattern or regular practice of

failing to meet the minimum distribution requirements of section 401(a)(9)

with respect to one or more employees will not be considered an isolated

instance even if each instance is de minimis.

(B). DISTRIBUTIONS COMMENCING BEFORE AN EMPLOYEE'S DEATH.

(B-1). Q. In the case of distributions before an employee's death, how

must the employee's entire interest be distributed in order to satisfy

section 401(a)(9)(A)?

A.--

(a) In order to satisfy section 401(a)(9)(A), the entire interest of each

employee (1) must be distributed to such employee not later than the

required beginning date, or (2) must be distributed, beginning not later

than the required beginning date, over the life of such employee or over

the lives of such employee and the designated beneficiary (or over a

period not extending beyond life expectancy of such employee or the joint

life and last survivor expectancy of such employee and the designated

beneficiary).

(b) See B-2 and B-3 for the definition of required beginning date. See D-1

through D-4 for the determination of the designated beneficiary of the

employee. See E-1 and E-3 through E-8 for the rules for calculating the

life expectancy of the employee (and the designated beneficiary). See F-1

through F-7 for the rules for determining the amount of the minimum

distribution to be made each year.

B-2. Q. For purposes of section 401(a)(9)(C), what does the term "required

beginning date" mean?

A.--

(a) For an employee who attains age 70 1/2 after December 31, 1987 (i.e.,

age .70 after June 30, 1987), the term "required beginning date" means

April 1 of the calendar year following the calendar year in which the

employee attains age 70 1/2.

(b) For an employee who attains age 70 1/2 before January 1, 1988 (i.e.,

age 70 before July 1, 1987) and is not a "5-percent owner" (as defined in

paragraph (d)), the term "required beginning date" means April 1 of the

calendar year following the later of (1) the calendar year in which the

employee attains age 70 1/2 or (2) the calendar year in which the employee

retires.

"5-percent owner" (as defined in paragraph (d)), the term "required

beginning date" means April 1 of the calendar year following the later of

(1) the calendar year in which the employee attains age 70 1 /2, or (2)

the earlier of (i) the calendar year with or within which ends the plan

year in which the employee becomes a "5-percent owner," or (ii) the

calendar year in which the employee retires.

(d)--

(1) An employee is treated as a "5-percent owner" for purposes of

this Q&A, if such employee is a "5-percent owner" (as defined in

section 416(i)) at any time during the plan year ending with or

within the calendar year in which such owner attains age 66 1/2 or

any subsequent plan year. Once an employee is described in this

subparagraph, distributions must continue to such employee even if

such employee ceases to own more than 5 percent of the employer in

a subsequent year.

(2) The determination of whether or not an employee is a 5-percent

owner will be made in accordance with section 416 but will be made

without regard to whether the plan is top-heavy.

(3) An employee's required beginning date is determined under

paragraph (c) if the employee is a 5-percent owner during any plan

year beginning after December 31, 1979. For example, if an employee

attains age 66 1/2 within calendar year 1980 and is a 5-percent

owner during the plan year ending within calendar year 1980, but is

not a 5-percent owner at any time during any other plan year, the

employee is considered a 5-percent owner and the employee's required

beginning date is determined under paragraph (c) and this paragraph.

B-3. Q. When does an employee attain age 70 1/2?

A. An employee attains age 70 1/2 as of the date six months after the 70th

anniversary of the employee's birth. For example, if an employee's date

of birth was June 30, 1919, the 70th anniversary of such employee's birth

is June 30, 1989. Such employee attains age 70 1/2 on December 30, 1989.

Consequently, such employee's required beginning date is April 1, 1990.

However, if the employee's date of birth was July 1, 1919, the 70th

anniversary of such employee's birth would be July 1, 1989. Such employee

would then attain age 70 1/2 on January 1, 1990.

B-3A. Q. Must distributions made before the employee's required beginning

date satisfy section 401(a)(9)?

A. Lifetime distributions made before the employee's required beginning

date for calendar years before the employee's first distribution calendar

year, as defined in F-1, need not be made in accordance with section

401(a)(9). However, if distributions commence under a particular

distribution option, such as in the form of an annuity, before the

employee's required beginning date for the employee's first distribution

calendar year, the distribution option will fail to satisfy section

401(a)(9) at the time distributions commence if, under the particular

distribution option, distributions to be made for the employee's first

distribution calendar year or any subsequent distribution calendar year

will not satisfy section 401(a)(9).

B-4. Q. If distributions have begun to an employee before the employee's

death (in accordance with section 401(a)(9)(A)(ii)), how must

distributions be made after an employee's death?

A. Section 401(a)(9)(B)(i) provides that if the distribution of the

employee's interest has begun in accordance with section 401(a)(9)(A)(ii)

and the employee dies before his entire interest has been distributed to

him, the remaining portion of such interest must be distributed at least

as rapidly as under the distribution method being used under section

401(a)(9)(A)(ii) as of the date of his death. As explained further in D-3,

in the case of distributions which began before the employee's death and

which are being paid over the lives of the employee and a designated

beneficiary (or over a period not exceeding the joint life and last

survivor expectancy), the designated beneficiary whose life or life

expectancy was being used to determine the period described in section

401(a)(9)(A)(ii) must be the beneficiary of such remaining portion unless

otherwise provided in E-5.

B-5. Q. For purposes of section 401(a)(9)(B), when are distributions

considered to have begun to the employee in accordance with section

401(a)(9)(A)(ii)?

A.--

(a) GENERAL RULE. Except as provided in paragraph (b), distributions are

treated as having begun to the employee in accordance with section

401(a)(9)(A)(ii) on the employee's required beginning date, even though

payments may actually have been made before that date. For example, if

employee A upon retirement in 1990 at age 65 1/2 begins receiving

installment distributions from a profit-sharing plan over a period not

exceeding the joint life and last survivor expectancy of A and A's

beneficiary, benefits are not treated as having begun in accordance with

section 401(a)(9)(A)(ii) until April 1, 1986 (the April 1 following the

calendar year in which A attains age 70 1/2). Consequently, if such

employee dies before April 1, 1996 (A's required beginning date),

distributions to be made after A's death must be made in accordance with

section 401(a)(9)(B)(ii) or (iii) and (iv). This is the case even though

the plan has distributed the minimum distribution for the first

distribution calendar year (as defined in F-1) before A's death.

(b) ANNUITIES. If distributions irrevocably (except for acceleration)

commence to an employee on a date before the employee's required beginning

date over a period permitted under section 401(a)(9)(A)(ii) and the

distribution form is an annuity under which distributions are made in

accordance with the provisions of F-3 (and if applicable F-4),

distributions will be considered to have begun on the actual comencement

date in accordance with section 401(a)(9)(A)(ii) even if the employee dies

before the employee's required beginning date. Thus, pursuant to section

401(a)(9)(B)(i), after the employee's death, the remaining portion of the

employee's interest must continue to be distributed at least as rapidly as

under the method of distribution in effect as of the employee's date of

death and the rules in section 401(a)(9)(B)(ii) or (iii) and (iv) do not

apply. See D-3 and E-1 for special rules for determining the employee's

designated beneficiary and for determining life expectancy.

that the employee's remaining interest be distributed at least as rapidly

as under the method being used under section 401(a)(9)(A)(ii) as of the

date of the employee's death.

C. DISTRIBUTIONS COMMENCING AFTER AN EMPLOYEE'S DEATH.

C-1. Q. In the case in which an employee dies before distributions are

treated as having begun to the employee for purposes of section

401(a)(9)(A)(ii), how must the employee's entire interest be distributed

in order to satisfy section 401(a)(9)?

A.--

(a) In the case in which an employee dies before distributions are treated

as having begun to an employee in accordance with section

401(a)(9)(A)(ii), section 401(a)(9)(B) provides two methods for

distributing the employee's interest. In order to satisfy section

401(a)(9), distributions must be made under one of these two methods. The

first method (the five-year rule in section 401(a)(9)(B)(ii)) requires

that the entire interest of the employee be distributed within 5 years of

the employee's death regardless of to whom or to what entity the

distribution is made. The second method (the exception to the five-year

rule in section 401(a)(9)(B)(iii)) requires that any portion of an

employee's interest which is payable to (or for the benefit of) a

designated beneficiary be distributed, commencing within one year of the

employee's death, over the life of such beneficiary (or over a period not

extending beyond the life expectancy of such beneficiary). Section

401(a)(9)(B)(iv) provides special rules where the designated beneficiary

is the surviving spouse of the employee, including a special commencement

date for distribution under section 401(a)(9)(B)(iii) to the surviving

spouse.

(b) See C-2 to determine when the five-year period in section

401(a)(9)(B)(ii) ends. See C-3 to determine when distribution under the

exception to the five-year rule in section 401(a)(9)(B)(iii) and (iv) must

commence. See C-4 for the rules for determining which of the methods

described in paragraph (a) applies. See D-1, D-2, and D-4 in order to

determine the designated beneficiary under section 401(a)(9)(B)(iii) and

(iv). See E-2 through E-8 for the rules for calculating the designated

beneficiary's life expectancy. See F-1 through F-7 for the rules for

determining the amount of the minimum distribution to be distributed each

year.

C-2. Q. As of what date must the employee's entire interest be distributed

in order to satisfy the five-year rule in section 401(a)(9)(B)(ii)?

A. In order to satisfy the five-year rule in section 401(a)(9)(B)(ii), the

employee's entire interest must be distributed as of December 31 of the

calendar year which contains the fifth anniversary of the date of the

employee's death. For example, if an employee dies on January 1 of 1990,

the entire interest must be distributed by December 31, 1995, in order to

satisfy the five-year rule in section 401(a)(9)(B)(ii).

C-3. Q. When are distributions required to commence in order to satisfy

the exception to the five-year rule in section 401(a)(9)(B)(iii) and (iv)?

A.--

(a) NONSPOUSE BENEFICIARY. In order to satisfy the rule in section

401(a)(9)(B)(iii) (the exception to the five-year rule for nonspouse

beneficiaries), if the designated beneficiary is not the employee's

surviving spouse. Distributions must commence on or before December 31 of

the calendar year immediately following the calendar year in which the

employee died. This rule also applies to the distribution of the entire

remaining benefit if, as of the employee's date of death, an individual is

designated as a beneficiary in addition to the employee's surviving

spouse. See H-2 and H-2A, however, if the employee's benefit is divided

into separate accounts (or segregated shares, in the case of a defined

benefit plan).

(b) SPOUSAL BENEFICIARY. In order to satisfy the rule in section

401(a)(9)(B)(iii) and (iv), if the designated beneficiary is the

employee's surviving spouse, distributions must comence on or before the

later of (1) December 31. of the calendar year immediately following the

calendar year in which the employee died and (2) December 31 of the

calendar year in which the employee would have attained age 70 1/2.

C-4. Q. How is it determined whether the five-year rule in section

401(a)(9)(B)(ii) or the exception to the five-year rule in section

401(a)(9)(B)(iii) and (iv) applies to a distribution?

A.--

(a) NO PLAN PROVISION. If a plan does not adopt an optional provision

specifying the methods of distribution after the death of an employee,

distribution must be made as follows:

(1) In the case in which the surviving spouse of an employee is a

beneficiary of the employee, distributions are to be made in

accordance with the exception to the five-year rule in section

401(a)(9)(B)(iii) and (iv).

(2) In all other cases, distributions are to be made in accordance

with the five-year rule in section 401(a)(9)(B)(ii).

(b) OPTIONAL METHODS. The plan may adopt a provision specifying which of

the two methods apply to distributions after the death of an employee. For

example, the plan may specify that distribution in every case will be made

in accordance with the exception to the five-year rule in section

401(a)(9)(B)(iii) and (iv). Further, a plan need not have the same method

of distribution for the benefits of all employees, e.g., a plan may have

one method of distribution for benefits of employees whose beneficiaries

are not surviving spouses and another method of distribution for the

benefits of employees whose beneficiaries are surviving spouses, so long

as there is a single method with respect to the benefit of each employee.

(If an employee's benefit is divided into separate accounts, see H-2 and H-

2A).

employees (or beneficiaries) to elect on an individual basis whether the

five-year rule in section 401(a)(9)(B)(ii) or the exception to the five-

year rule in section 401(a)(9)(B)(iii) and (iv) applies to distributions.

In operation, such an election must be made no later than the earlier of

(1) December 31 of the calendar year in which distribution would be

required to commence in order to satisfy the requirements for the

exception to the five-year rule in section 401(a)(9)(B)(iii) and (iv) (see

C-3 for the determination of such calendar year), or (2) December 31 of

the calendar year which contains the fifth anniversary of the date of

death of the employee. As of such date, the election must be irrevocable

with respect to the beneficiary (and all subsequent beneficiaries) and

must apply to all subsequent years. If a plan provides for elections, the

plan may also specify, pursuant to paragraph (b), which method of

distribution applies if neither the employee nor the beneficiary makes the

election. If neither the employee nor the beneficiary elects a method and

the plan does not specify which rules applies, distribution must be made

in accordance with paragraph (a).

(d) OTHER REQUIREMENTS. A plan must satisfy other distribution

requirements under the Code. For example, plan distributions must satisfy

the survivor annuity requirements of sections 401(a)(11) and 417, except

as otherwise provided in this section. These requirements may mandate a

particular method of distribution to a surviving spouse. Any plan

provision described in paragraphs (b) and (c), or method of distribution

elected pursuant to paragraph (c), must satisfy these other distribution

rules.

C-5. Q. If the employee's surviving spouse is the employee's designated

beneficiary and such spouse dies after the employee, but before

distributions have begun to the surviving spouse under section

401(a)(9)(B)(iii) and (iv), how is the employee's interest to be

distributed?

A. Pursuant to section 401(a)(9)(B)(iv)(II), if the surviving spouse dies

after the employee, but before distributions to such spouse have begun

under section 401(a)(9)(B)(iii) and (iv), the five-year rule in section

401(a)(9)(B)(iii) and the exception to the five-year rule in section

401(a)(9)(B)(iii) are to be applied as if the surviving spouse were the

employee. In applying this rule, the date of death of the surviving spouse

shall be substituted for the date of the death of the employee. However,

in such case, the rules in section 401(a)(9)(B)(iv) are not available to

the surviving spouse of the deceased employee's surviving spouse.

C-6. Q. For purposes of section 401(a)(9)(B)(iv)(II), when are

distributions considered to have begun to the surviving spouse?

A.--

(a) GENERAL RULE. Except as otherwise provided in paragraph (b),

distributions are considered to have begun to the surviving spouse of an

employee, for purposes of section 401(a)(9)(B)(iv)(II), on the date,

determined in accordance with C-3, on which distributions are required to

commence to the surviving spouse, even though payments have actually been

made before that date. See paragraph (b) for special rule for annuities.

(b) ANNUITY. If distributions commence irrevocably (except for

acceleration) to the surviving spouse of an employee over a period

permitted under section 401(a)(9)(B)(iii)(II) before the date on which

distributions are required to commence and the distribution form is an

annuity under which distributions are made as of the date distributions

commence in accordance with the provisions of F-3 (and F-4 if applicable),

distributions will be considered to have begun on the actual commencement

date for purposes of section 401(a)(9)(B)(iv)(II). Consequently, in such

case, section 401(a)(9)(B)(ii) and (iii) will not apply upon the death of

the surviving spouse as though the surviving spouse were the employee even

if the spouse dies before the date, determined in accordance with C-3, on

which distributions are required to commence to the surviving spouse.

Instead, the annuity distributions must continue to be made, in accordance

with the provisions of F-3 or F-4, at least as rapidly as under the method

of distribution being used as of the date of the surviving spouse's death.

The rules of F-3A shall apply in determining whether distributions are

being made at least as rapidly as under the method of distribution being

used as of the date of the surviving spouse's death.

D. DETERMINATION OF THE DESIGNATED BENEFICIARY.

D-1. Q. Must an employee (or the employee's spouse) make an affirmative

election specifying a beneficiary for a person to be a designated

beneficiary under section 401(a)(9)(E)?

A. No. A person's status as designated beneficiary is not dependent upon

being selected by an employee (or by the employee's surviving spouse, in

the case of certain distributions under section 401(a)(9)(B)(iv)(II)).

Thus, for example, if the terms of the plan specify the beneficiary, then

whoever is so specified is the designated beneficiary and is treated for

purposes of section 401(a)(9) as having been designated by the employee

(or the employee's surviving spouse). The choice of beneficiary is subject

to the requirements of sections 401(a)(11), 414(p), and 417.

D-2. Q. May an individual who is not designated as a beneficiary under the

plan be considered a designated beneficiary for purposes of determining

the minimum distribution required under section 401(a)(9)?

A. (a)--

(1) Except to the extent provided in E-5 with respect to former

beneficiaries, designated beneficiaries are only individuals who are

designated as beneficiaries under the plan. An individual may be

designated as a beneficiary under the plan either by the terms of the

plan or, if the plan provides, by an affirmative election by the

employee (or the employee's surviving spouse) specifying the

beneficiary. A beneficiary designated as such under the plan is an

individual who is entitled to a portion of an employee's benefit,

contingent on the employee's death or another specified event. For

example, if a distribution is in the form of a joint and survivor

annuity over the life of the employee and another individual, the

plan does not satisfy section 401(a)(9) unless such other individual

is a designated beneficiary under the plan. A designated beneficiary

need not be specified by name in the plan or by the employee to the

plan in order to be a designated beneficiary so long as the

individual who is to be the beneficiary is identifiable under the

plan as of the employee's required beginning date, or as of the date

of the employee's death (in the case of distributions governed by

section 401(a)(9)(B)(iii) and (iv)), and at all subsequent times. The

members of a class of beneficiaries capable of expansion or

contraction will be treated as being identifiable if it is possible

at the applicable time to identify the class member with the shortest

life expectancy. The fact that an employee's interest under the plan

passes to a certain individual under applicable state law does not

make such individual a designated beneficiary unless such individual

is designated as a beneficiary under the plan.

(2) This paragraph (a) is illustrated by the following example.

EXAMPLE. Employee X attains age 70 1/2 in calendar year 1990. As

of April 1, 1991 X designates as his beneficiaries under the

plan his spouse and his children. X does not specify them by

name. Even though X did not specify his spouse and his children

by name they are identifiable based on the relationship to X as

of his required beginning date. Further it is irrelevant that

additional children of X may be born after his required

beginning date and thus that the class of beneficiaries is

capable of expansion.

(b) See E-5 for the rules which apply if there is a change in

beneficiaries under the plan with respect to an employee.

D-2A. Q. May a person other than an individual be considered to be a

designated beneficiary for purposes of section 401(a)(9)?

A.--

(a) No. Only individuals may be designated beneficiaries for purposes of

section 401(a)(9). A person who is not an individual, such as the

employee's estate, may not be a designated beneficiary. However, see D-5

and D-6 for special rules which apply to trusts.

(b) Except as otherwise provided in D-5, D-6, and E-5(e)(1), if a person

other than an individual is designated as a beneficiary of an employee's

benefit, the employee will be treated as having no designated beneficiary

for purposes of section 401(a)(9). In such case, distribution under

section 401(a)(9)(A)(ii) must be made over the employee's life or over a

period not exceeding the employee's life expectancy. Further, in such

case, if upon the employee's death section 401(a)(9)(B)(i) does not apply,

distribution must be made in accordance with the 5-year rule in section

401(a)(9)(B)(ii).

D-3. Q. For purposes of calculating the distribution period described in

section 401(a)(9)(A)(ii) (for distributions before death), when is the

designated beneficiary determined?

A.--

(a) GENERAL RULE REQUIRED BEGINNING DATE. For purposes of calculating the

distribution period described in section 401(a)(9)(A)(ii) (for

distributions before death), except as otherwise provided in paragraphs

(b) through (d), the designated beneficiary will be determined as of the

employee's required beginning date. If, as of that date, there is no

designated beneficiary under the plan to receive the employee's benefit

upon the employee's death, the distribution period described in section

401(a)(9)(A)(ii) is limited to the employee's life (or a period not

extending beyond the employee's life expectancy). (If there is a

beneficiary (other than a beneficiary whose rights are contingent on the

death of another beneficiary) who is not designated in accordance with D-

2, there is deemed to be no designated beneficiary for purposes of section

401(a)(9)(A)(ii).)

(b) EXCEPTION FOR FIRST DISTRIBUTION YEAR. Except to the extent that B-

5(b) is applicable, if a designated beneficiary is added or replaces

another designated beneficiary during the calendar year in which the

employee's required beginning date occurs, but on or before the employee's

required beginning date (January 1 through April 1 of such calendar year),

the designated beneficiary of the employee for purposes of calculating the

minimum distribution for the employee's first distribution calendar year

(as defined in F-1) may be determined as of any date after December 31 of

the employee's first distribution calendar year and before the employee's

required beginning date. Thus, e.g., for purposes of determining the

minimum distribution for the employee's first distribution calendar year,

either designated beneficiary may be used to determine the joint life and

last survivor expectancy of the employee and designated beneficiary.

However, for purposes of determining the minimum distribution for

subsequent distribution calendar years (including the distribution

calendar year in which the employee's required beginning date occurs), the

designated beneficiary will be determined as of the employee's required

beginning date.

or before the employee's required beginning date), the employee's

designated beneficiary may be determined as of any date during the 90 days

before the date on which the annuity payments commence.

(d) MULTIPLE AND SUBSTITUTE BENEFICIARIES. Notwithstanding anything in

this D-3 to the contrary, the rules in E-5 apply if more than one

beneficiary is designated with respect to an employee as of the applicable

date (in paragraphs (a), (b), or (c)), on which the employee's designated

beneficiary is determined or if a beneficiary is added or replaces another

beneficiary (due to death or any other reason) after such date.

D-4. Q. For purposes of calculating the distribution period described in

section 401(a)(9)(B)(iii) or (iv) (for distributions beginning after death

in accordance with the exception to the five-year rule), when is the

designated beneficiary determined?

A.--

(a) EMPLOYEE. Except as provided in paragraph (b), for purposes of

calculating the distribution period described in section 401(a)(9)(B)(iii)

or (iv), the designated beneficiary will be determined as of the

employee's date of death. If, as of the date of the employee's death,

there is no designated beneficiary under the plan with respect to that

employee, distribution must be made in a accordance with the five-year

rule in section 401(a)(9)(B)(ii). (If there is a beneficiary (other than a

beneficiary whose rights are contingent on the death of another

beneficiary) who is not designated in accordance with D-2, there is deemed

to be no designated beneficiary for purposes of section 401(a)(9)(B)(iii)

and (iv).)

(b) SURVIVING SPOUSE. As provided in C-5, in the case in which the

employee's spouse is the designated beneficiary as of the date of the

employee's death for distributions under section 401(a)(9)(B)(iii) and the

surviving spouse dies after the employee and before the date on which

distributions have begun to the spouse under section 401(a)(9)(B)(iii) and

(iv), the rule in section 401(a)(9)(B)(iv)(II) will apply. Thus, the

relevant designated beneficiary for determining the distribution period is

the designated beneficiary of the surviving spouse. Such designated

beneficiary will be determined as of the surviving spouse's date of death

(rather than the employee's date of death). If, as of the date of the

surviving spouse's death, there is no designated beneficiary under the

plan with respect to that surviving spouse, distribution must be made in

accordance with the 5-year rule in section 401(a)(9)(B)(ii). (If there is

a beneficiary (other than a beneficiary whose rights are contingent on the

death of another beneficiary) who is not designated in accordance with D-

2, there is deemed to be no designated beneficiary for purposes of section

401(a)(9)(B)(iii).)

contrary, the rules in E-5 apply if more than one beneficiary is

designated with respect to an employee as of the date determined in

accordance with paragraphs (a) and (b) on which the designated beneficiary

is to be determined.

D-5. Q. In the case in which a trust is named as a beneficiary of an

employee, are the beneficiaries of the trust with respect to the trust's

interest in the employee's benefit treated as having been designated as

beneficiaries of the employee under the plan for purposes of determining

the distribution period under section 401(a)(9)(A)(ii)?

A.--

(a) In the case in which a trust is named as a beneficiary of an employee,

all beneficiaries of the trust with respect to the trust's interest in the

employee's benefit are treated as having been designated as beneficiaries

of the employee under the plan for purposes of determining the

distribution period under section 401(a)(9)(A)(ii) if, as of the later of

the date on which the trust is named as a beneficiary of the employee, or

the employee's required beginning date, and as of all subsequent periods

during which the trust is named as a beneficiary, the following

requirements are met.

(1) The trust is a valid trust under state law, or would be but for

the fact that there is no corpus.

(2) The trust is irrevocable.

(3) The beneficiaries of the trust who are beneficiaries with respect

to the trust's interest in the employee's benefit are identifiable

from the trust instrument within the meaning of D-2.

(4) A copy of the trust instrument is provided to the plan.

(b) Pursuant to D-2A, only an individual may be a designated beneficiary.

Consequently, a trust itself may not be the designated beneficiary.

Consequently, a trust itself may not be the designated beneficiary even

though the trust is named as a beneficiary. However, if the requirements

in paragraph (a) are met, for purposes of section 401(a)(9), distributions

made to the trust will be treated as paid to the beneficiaries of the

trust with respect to the trust's interest in the employee's benefit. If,

as of any date on or after the employee's required beginning date, a trust

is named as a beneficiary of the employee and the requirements in

paragraph (a) are not met, the employee will be treated as not having a

designated beneficiary under the plan for purposes of section

401(a)(9)(A)(ii). Consequently, for calendar years subsequent to such

date, distribution must be made over the employee's life (or over the

period which would have been the employee's remaining life expectance

determined as if no beneficiary had been designated as of the employee's

required beginning date). In the case of payments to a trust having more

than one beneficiary, see E-5 for the rules for determining the designated

beneficiary whose life expectancy will be used to determine the

distribution period.

D-6. Q. In the case in which a trust is named as a beneficiary of an

employee, are beneficiaries of the trust with respect to the trust's

interest in the employee's benefit treated as designated beneficiaries

under the plan with respect to the employee for purposes of determining

the distribution period under section 401(a)(9)(B)(iii) and (iv)?

A.--

(a) In the case in which a trust is named as a beneficiary of an employee,

all beneficiaries of the trust with respect to the trust's interest in the

employee's benefit are treated as designated beneficiaries of the employee

under the plan for purposes of determining the distribution period under

section 401(a)(9)(B)(iii) and (iv) if the requirements in paragraph (a) of

D-5 are satisfied as of the date of the employee's death. If the

requirements in paragraph (a) of D-5 are satisfied as of the date of the

employee's death, distributions to the trust for purposes of section

401(a)(9) will be treated as being paid to the appropriate beneficiary of

the trust with respect to the trust's interest in the employee's benefit.

However, if a trust is named as a beneficiary of an employee and if, as of

the date of the employee's death, the requirements of D-5 are not

satisfied, the employee will be treated as not having a designated

beneficiary under the plan. Consequently, distribution must be made in

accordance with the five-year rule in section 401(a)(9)(B)(ii).

(b) The rules of D-5 and this D-6 also apply for purposes of applying the

provisions of section 401(a)(9)(B)(iv)(II) if a trust is named as a

beneficiary of the employee's surviving spouse.

E. DETERMINATION OF LIFE EXPECTANCY.

E-1. Q. For required distributions under section 401(a)(9)(A), what age

(or ages) is used to calculate the employee's life expectancy (or the

joint life and last survivor expectancy of the employee and a designated

beneficiary)?

A.--

(a) Except as otherwise provided in paragraph (b), for required

distributions under section 401(a)(9)(A), life expectancies are calculated

using the employee's (and the designated beneficiary's) attained age as of

the employee's birthday (and the designated beneficiary's birthday) in the

calendar year in which the employee attains age 70 1/2. If life expectancy

is being recalculated pursuant to E-6 through E-8, the life expectancy of

the employee or spouse (or the joint life and last survivor expectancy of

the employee and spouse) will be recalculated using the employee's (and

the spouse's) attained age as of the employee's birthday (and the

surviving spouse's birthday) in each succeeding calendar year in which

recalculation is provided for purposes of calculating the minimum

distribution for that distribution calendar year.

(b) If, pursuant to B-2(b), an employee's required beginning date is April

1 of the calendar year following the calendar year in which the employee

retires or becomes a 5-percent owner, such calendar year is substituted in

paragraph (a) for the calendar year in which the employee attains age 70

1/2.

employee before the employee's required beginning date, the calendar year

in which the annuity payments commence is substituted in paragraph (a) for

the calendar year in which the employee attains age 70 1/2.

E-2. Q. In the case of any distribution under section 401(a)(9)(B)(iii)

and (iv), what age is used to calculate the designated beneficiary's life

expectancy?

A.--

(a) In the case of any distribution under section 401(a)(9)(B)(iii) and

(iv), the life expectancy of any designated beneficiary is calculated

based on the beneficiary's attained age as of the beneficiary's birthday

in the calendar year in which distributions are required to commence to

such beneficiary in order to satisfy section 401(a)(9)(B)(iii) and (iv).

For example, if an unmarried participant (A) dies at age 50 on January 31,

1987, A's designated beneficiary is A's brother (B), and B will receive

A's interest over B's life expectancy, the date on which distributions are

required to commence to B in order to satisfy section 401(a)(9)(B)(iii) is

December 31, 1988 (see C-3). Therefore, B's life expectancy is calculated

based on B's attained age as of B's birthday in calendar year 1988. This

rule also applies to a designated beneficiary of a surviving spouse where

such surviving spouse is treated as the employee for purposes of applying

section 401(a)(9)(B)(iii). If the life expectancy of the surviving spouse

is being recalculated pursuant to E-6 through E-8, the life expectancy of

the surviving spouse will be recalculated using the surviving spouse's

attained age as the surviving spouse's birthday in each succeeding

calendar year in which recalculation is provided, for purposes of

calculating the minimum distribution for that distribution calendar year.

(b) If distribution under section 401(a)(9)(B)(iii) and (iv) commences

irrevocably (except for acceleration) over a period described in section

401(a)(9)(B)(iii)(II) in a calendar year in which distributions are

required to commence and distribution is an annuity under which

distributions are made in accordance with the provisions of F-3 (and if

applicable F-4), the designated beneficiary's life expectancy (where

applicable) is based on the designated beneficiary's attained age as of

the designated beneficiary's birthday in the calendar year in which

distribution commences.

surviving spouse, dies after the employee but before the designated

beneficiary's birthday in the calendar year in which life expectancy is

determined under paragraphs (a) and (b), such beneficiary will be treated

as being alive on such date for purposes of calculating the designated

beneficiary's life expectancy. (See C-5 for the special rule which applies

if the surviving spouse dies after the employee but before the date on

which distributions have begun to the surviving spouse.)

E-3 & 4. Q. What life expectancies must be used for purposes of

determining required distributions under section 401(a)(9)?

A. Life expectancies for purposes of determining required distributions

under section 401(a)(9) must be computed by use of the expected return

multiples in Tables V and VI of section 1.72-9.

E-5. Q. If an employee has more than one designated beneficiary or if a

designated beneficiary is added or replaces another designated beneficiary

after the date for determining the designated beneficiary, which

designated beneficiary's life expectancy will be used to determine the

distribution period?

A.--

(A) GENERAL RULE.--

(1) Except as otherwise provided in paragraph (f), if more than one

individual is designated as a beneficiary with respect to an employee

as of the applicable date for determining the designated beneficiary,

the designated beneficiary with the shortest life expectancy will be

the designated beneficiary for purposes of determining the

distribution period. However, except as otherwise provided in D-5, D-

6, and paragraph (e)(1) of this E-5, if a person other than an

individual is designated as a beneficiary, the employee will be

treated as not having any designated beneficiaries for purposes of

section 401(a)(9) even if there are also individuals designated as

beneficiaries. The date for determining the designated beneficiary

(under D-3 or D-4, whichever is applicable) is the applicable date.

The period described in section 401(a)(9)(A)(ii) (for distributions

commencing before the employee's death) or section 401(a)(9)(B)(iii)

(for distributions over a life expectancy commencing after the

employee's death), whichever is applicable, is the distribution

period.

(2) See H-2 for special rules which apply if an employee's benefit

under a plan is divided into separate accounts (or segregated shares

in the case of a defined benefit plan) and the beneficiaries with

respect to a separate account differ from the beneficiaries of

another separate account.

(b) CONTINGENT BENEFICIARY. Except as provided in paragraph (e)(1), if a

beneficiary's entitlement to an employee's benefit is contingent on an

event other than the employee's death (e.g., death of another

beneficiary), such contingent beneficiary is considered to be a designated

beneficiary for purposes of determining which designated beneficiary has

the shortest life expectancy under paragraph (a).

(1) Except as provided in paragraph (e)(2) (in the case of the death

of a beneficiary), if, after the applicable date for determining the

designated beneficiary, a new designated beneficiary with a life

expectancy shorter than the life expectancy of the designated

beneficiary whose life expectancy is being used to determined the

distribution period is added or replaces a designated beneficiary,

the new designated beneficiary is treated as the designated

beneficiary for purposes of determining the distribution period. In

such case, the new beneficiary's life expectancy will be used to

calculate the distribution period in subsequent calendar years. In

determining the beneficiary with the shorter life expectancy, the

life expectancies will be calculated as of the applicable birthdays

in the calendar year specified in and in the manner provided in E-1

through E-4. Consequently, the old distribution period must be

replaced by a new distribution period. The new distribution period

equals the period which would have been the remaining joint life and

last survivor expectancy of the employee and the designated

beneficiary if the new designated beneficiary had been designated as

of the applicable date. If instead, the new designated beneficiary

has a life expectancy longer than the life expectancy of the

designated beneficiary whose life expectancy is being used to

determine the distribution period, the life expectancy of the old

designated beneficiary will continue to be used for purposes of

determining the distribution period even though such old designated

beneficiary is no longer a beneficiary under the plan.

(2) If a new beneficiary who is not an individual is added or

replaces a designated beneficiary after the applicable date, unless

otherwise provided in D-5 and D-6, the employee will be treated as

not having designated a beneficiary. Further, except as provided in

paragraph (e)(2) in the case of the death of a designated

beneficiary, if at any point in time after the applicable date there

is no beneficiary designated with respect to the employee, the

employee will also be treated as not having a designated beneficiary.

In either case, the new distribution period described in subparagraph

(1) will equal the period which would have been the employee's

remaining life expectancy if no beneficiary had been designated as of

the applicable date.

(3) Any adjustment described in this paragraph will only affect

distributions for calendar years after the calendar year in which the

new designated beneficiary is added or replaces the prior

beneficiary, or there is no beneficiary designated with respect to

the employee.

(d) RECALCULATION FOR SPOUSE. For purposes of determining the distribution

period in accordance with paragraph (a) or (c)(1), if any designated

beneficiary involved is the employee's spouse and the life expectancy of

the spouse is being recalculated, the life expectancy of the spouse as

recalculated will be compared in each calendar year to the remaining life

expectancy of the other applicable designated beneficiary or

beneficiaries, not recalculated, and the shortest life expectancy will be

used for determining the minimum distribution required for that calendar

year.

(e) DEATH CONTINGENCY.--

(1) If a beneficiary's entitlement to an employee's benefit is

contingent on the death of a prior beneficiary, such contingent

beneficiary will not be considered a beneficiary for purposes of

determining who is the designated beneficiary with the shortest life

expectancy under paragraph (a) or whether a beneficiary who is not an

individual is a beneficiary. This rule does not apply if the death

occurs prior to the applicable date for determining the designated

beneficiary.

(2) If the designated beneficiary whose life expectancy is being used

to calculate the distribution period dies on or after the applicable

date such beneficiary's remaining life expectancy will be used to

determine the distribution period whether or not a beneficiary with a

shorter life expectancy receives the benefits. However, in accordance

with E-8, if the designated beneficiary is the employee's spouse, the

spouse's life expectancy is being recalculated, and the spouse dies,

the spouse does not have any remaining life expectancy; therefore, in

the calendar year following the spouse's death, the spouse's life

expectancy will be reduced to zero.

(3) This paragraph is illustrated by the following example:

EXAMPLE. The designated beneficiary of an unmarried participant

(X) as of X's required beginning date on April 1, 1988, is X's

sister (A), but X has specified that, in the event of A's

death, X's brother (B) will become the beneficiary. A's life

expectancy as of A's birthday in calendar year 1987 is 25

years. B's life expectancy as of B's birthday in calendar year

1987 is 10 years. On X's required beginning date, A is the

designated beneficiary because B's entitlement to benefits is

contingent on A's death. A dies on May 1, 1988. A's remaining

life expectancy will continue to be used to determine the

distribution period with respect to X for purposes of

determining the minimum distribution for the 1988 distribution

calendar year and each succeeding distribution calendar year.

This is true even though, upon A's death, B will become X's

beneficiary and B's life expectancy as of B's birthday in

calendar year 1987 is shorter than A's life expectancy as of

A's birthday in that calendar year. However, if B's entitlement

was not contingent on A's death but was contingent for another

reason, B would be the designated beneficiary for purposes of

determining the period described in section 401(a)(9)(A)(ii),

even during the period in which his entitlement is contingent,

because B's life expectancy, as of B's birthday in calendar

year 1987, is shorter than A's life expectancy, as of A's

birthday in that calendar year.

(f) DESIGNATIONS BY BENEFICIARIES. If the plan provides (or allows the

employee to specify) that, after the employee's death, any person or

persons have the discretion to change the beneficiaries of the employee,

then, for purposes of determining the distribution period for both

distributions before and after the employee's death, the employee will be

treated as not having designated a beneficiary. However, such discretion

will not be found to exist merely because the employee's surviving spouse

may designate a beneficiary for distributions pursuant to section

401(a)(9)(B)(iv)(II).

E-6.

Q. After life expectancy has been determined as of the date provided in E-

1 or E-2, may life expectancy be recalculated?

A. Pursuant to section 401(a)(9)(D), after life expectancy has been

determined as of the date provided in E-1 and E-2, life expectancy of an

employee and the employee's spouse (other than in the case of a life

annuity) may be recalculated in accordance with E-7 and E-8 but not more

frequently than annually.

E-7. Q. How is it determined whether or not the life expectancies of the

employee and the employee's spouse will be recalculated pursuant to

section 401(a)(9)(D)?

A.--

(a) If the plan does not adopt an optional provision specifying whether

life expectancies will be determined with or without regard to the

permissive recalculation rule of section 401(a)(9)(D) and the employee or

spouse has not made an election pursuant to paragraph (c), the life

expectancy of the employee or spouse (or the joint life and last survivor

expectancy of the employee and spouse) must be recalculated annually as

provided in section 401(a)(9)(D) for purposes of determining all

distributions required under section 401(a)(9).

(b) The plan may adopt a provision specifying whether life expectancies

will be determined with or without regard to the permissive recalculation

rule of section 401(a)(9)(D). The life expectancy of the employee may be

recalculated even though the life expectancy of the spouse is not

recalculated and, correspondingly, the life expectancy of the spouse may

be recalculated even though the life expectancy of the employee is not

recalculated.

in the case of distributions described in section 401(a)(9)(B)(iii) and

(iv)) to elect the applicability or inapplicability of section

401(a)(9)(D). If such election is permitted, the employee (or spouse) must

elect whether or not life expectancy will be recalculated no later than

the time of the first required distribution under section 401(a)(9). As of

the date of the first required distribution under section 401(a)(9), a

method (either recalculation of life expectancy or no recalculation of

life expectancy) which is in effect with respect to an employee (or

spouse) must be irrevocable with respect to the employee (or spouse) and

must apply to all subsequent years. The plan may specify, pursuant to

paragraph (b), whether or not the expectancy will be recalculated in the

event that the employee (or spouse) fails to make the election. Absent

such a plan provision, the life expectancy of the employee (and the

spouse) must be recalculated annually pursuant to paragraph (a) in the

event that the employee (or spouse) fails to make the election.

E-8. Q. How are life expectancies recalculated annually under section

401(a)(9)(D)?

A.--

(a) An employee's life expectancy (or the joint life and last survivor

expectancy of the employee and spouse) is recalculated annually by

redetermining the employee's life expectancy (or the joint life and last

survivor expectancy of the employee and spouse) in each distribution

calendar year using the employee's (and spouse's) attained age as of the

employee's birthday (and the spouse's birthday) in that distribution

calendar year. Upon the death of the employee (or the employee's spouse),

the recalculated life expectancy of the employee (or the employee's

spouse) will be reduced to zero in the calendar year following the

calendar year of death. In any calendar year in which the last applicable

life expectancy is reduced to zero, the plan must distribute the

employee's entire remaining interest prior to the last day of such year in

order to satisfy section 401(a)(9).

(b) If the designated beneficiary is not the employee's spouse (or if the

spouse's life expectancy is not being recalculated) and the life

expectancy of the employee is being recalculated annually, the applicable

life expectancy for determining the minimum distribution for each

distribution calendar year will be determined by recalculating the

employee's life expectancy but not recalculating the beneficiary's life

expectancy. Such applicable life expectancy is the joint life and last

survivor expectancy using the employee's attained age as of the employee's

birthday in the distribution calendar year and an adjusted age of the

designated beneficiary. The adjusted age of the designated beneficiary is

determined as follows: First, the beneficiary's applicable life expectancy

is calculated based on the beneficiary's attained age as of the

beneficiary's birthday in the calendar year described in E-1, reduced by

one for each calendar year which has lapsed since that calendar year. The

age (rounded if necessary to the higher age) in Table V of section 1.72-9

is then located which corresponds to the designated beneficiary's

applicable life expectancy. Such age is the adjusted age of the designated

beneficiary. As provided in paragraph (a), upon the death of the employee,

the life expectancy of the employee is reduced to zero in the calendar

year following the calendar year of the employee's death. Thus, for

determining the minimum distribution for such calendar year and subsequent

calendar years, the applicable life expectancy is the applicable life

expectancy of the designated beneficiary determined under this paragraph.

EXAMPLE 1.--

(a) A participant in a qualified profit sharing plan retires on

January 1, 1987. The benefit determining the 1987 calendar

minimum distribution (determined in accordance with F-5) is

$100,000. As of the participant's birthday calendar year 1987

the participant who was born December 31, 1916 is age 71. The

participant's spouse some years earlier and the participant

designates his brother as his sole benificiary on his

retirement date and his brother is still designated as his sole

beneficiary as of April 1, 1988. As of his brother's birthday

calendar year 1987, his brother, who was born on July 2, 1920,

is age 67. The plan does not provide that life expectancies

will not be recalculated and does not permit employees to

elect not to recalculate life expectancy. Thus, pursuant to E-

7(a), the life expectancy of the participant will be

recalculated.

(b) For calendar year 1987, the payment that is to be made

pursuant to section 401(a)(9) is the benefit of $100,000

divided by the joint and last survivor expectancy of the

participant and his brother calculated using the age as of

their birthdays in calendar year 1987. Pursuant to Table VI of

section 1.72-9, such joint life and last survivor expectancy is

21.7 years. The pay required for 1987 is therefore $4,608.30

($100,000 divided by 21.7). $4,608.30 is distributed on April

1, 1988.

(determined in accordance with F-5) before adjustment for the

distribution on April 1, 1987 is $109,515.71. The amount for

minimum distribution on April 1, 1988 is then subtracted from

that amount. (109,515.71 - 4,608.30 = 104,904.41.) Thus,

$104,907.41 is the benefit to be used to determine the 1988

minimum distribution. The minimum payment for 1988 is

determined by dividing the benefit of $104,907.41 by the

recalculated joint life and last survivor expectancy of the

participant and his brother. Such joint life and last survivor

expectancy is recalculated as follows: (1) Life expectancy of

brother (using age as of birthday in calendar year 1987 from

Table V of section 1.72-9) = 18.4 years (2) Number of years

elapsed since 1987 = 1 years (3) Remaining period of life

expectancy of brother, (1) - (2) = 16.4 years (4) Age in Table

V of section 1.72-9 correspon- ding to life expectancy of 16.4

years (rounding to higher age) = 69 (5) Age of participant

(age determined using age as of birthday in calendar year 1989)

= 72 (6) Joint life and last survivor expectancy using the

ages in (4) and (5) from Table VI of section 1.72-9 years =

20.3 The minimum payment for 1988 is therefore $5,167.85

($104,907.41 divided by 20.3). This must be paid by December

31, 1988, to the participant. (d) The benefit for determining

the 1989 minimum distribution (determined in accordance with F-

5) is $109,714.00. The minimum payment for 1989 is determined

by dividing the benefit of $109,714.00 by the recalculated

joint life and last survivor expectancy of the participant and

his brother; such joint life and last survivor expectancy is

recalculated as follows: (1) Life expectancy of brother (using

age as of birthday in calendar year 1987 from Table V of

section 1.72-9) = 18.4 years (2) Number of years elapsed since

1987 = 2 years (3) Remaining period of life expectancy of

brother (1) - (2) = 16.4 (4) Age in Table V of section 1.72-9

corresponding to life expectancy of 16.4 years (rounding to

higher age) = 70 (5) Age of participant (age determined using

age as of birthday in calendar year 1989) = 73 (6) Joint life

and last survivor expectancy using the ages in (4) and (5) from

Table VI of section 1.72-9 years. = 19.4 The minimum payment

for 1989 is therefore $5,655.36 ($109,714.00 divided by 19.4).

This must be paid by December 31, 1989, to the participant.

EXAMPLE 2. Assume the same facts as in Example 1, except that the

participant dies in 1988 after the participant's required beginning

date. The recalculation of life expectancy for the participant and

the calculation of the minimum payment for 1988 will be the same as

in Example 1. The participant's life expectancy is not reduced to

zero until the calendar year following the year of death. The

calculation of the minimum payment for 1989 is as follows: (1) Life

expectancy of brother (using age as of birthday in calendar year

1988 from Table V of section 1.79-9) = 18.4 years (2) Number of

elapsed years since 1987 = 2 years (3) Remaining period, (1) - (2)

= 16.4 years (4) Benefit for determining 1989 minimum distribution

= $109,714.00 (5) Minimum payment for 1989, (4) divided by (3) = $

6,689.88 EXAMPLE 3. Assume the same facts in Example 1, except the

brother (rather than the participant) dies in 1988 after the

participant's required beginning date. The redetermination of life

expectancy for the participant and the calculation of the minimum

payment for 1988 and 1989 will be the same as in Example 1; the

brother's life expectancy was fixed at the time benefits commenced

and is used even after the brother dies.

F. DETERMINATION OF THE AMOUNT WHICH MUST BE DISTRIBUTED EACH YEAR.

(F-1). Q. If an employee's benefit is in the form of an individual

account, what is the amount required to be distributed for each calendar

year in the case of either (1) distributions to an employee before death

over a period described in section 401(a)(9)(A)(ii) or (2) to a

beneficiary after the employee's death over a period described in section

401(a)(9)(B)(iii)?

A.--

(a) GENERAL RULE. If an employee's benefit is in the form of an individual

account and is to be distributed over (1) a period not extending beyond

the life expectancy of the employee or the joint life and last survivor

expectancy of the employee and the designated beneficiary (as described in

section 401(a)(9)(A)(ii)) or (2) over a period not extending beyond the

life expectancy of the designated beneficiary (as described in section

401(a)(9)(B)(iii)), the amount required to be distributed for each

calendar year, beginning with the first calendar year for which

distributions are required and then for each succeeding calendar year,

must at least equal the quotient obtained by dividing the employee's

benefit by the applicable life expectancy. The minimum amount which is

required to be distributed on or before an employee's required beginning

date is always determined under this F-1 and not section 401(a)(9)(A)(i).

The amount described in section 401(a)(9)(A)(i) will always exceed the

amount determined under this F-1. See paragraph (e) for purchases of

annuity contracts. Also, see F-4A and Q&A-4 of section 1.401(a)(9)-2 for

additional limits under the minimum distribution incidental benefit

requirement on the divisor which must be used to determine the minimum

required distribution.

(b) DISTRIBUTION CALENDAR YEAR. A calendar year for which a minimum

distribution is required is a distribution calendar year. The first

calendar year for which a distribution is required is an employee's first

distribution calendar year. In the case of distributions required before

death under section 401(a)(9)(A), if an employee's required beginning date

is April 1 of the calendar year following the calendar year in which the

employee attains age 70 1/2, the employee's first distribution calendar

year is the year the employee attains age 70 1/2. However, if pursuant to

B-2(b), an employee's required beginning date is April 1 of the calendar

year following the calendar year in which the employee retires or becomes

a 5-percent owner, the calendar year in which the employee retires or

becomes a 5-percent owner is the employee's first distribution calendar

year. In the case of distributions to be made in accordance with the

exception to the five-year rule in section 401(a)(9)(B)(iii) and (iv), the

first distribution calendar year is the calendar year containing the date

described in C-3(a) or C-3(b), whichever is applicable.

before the employee's required beginning date shall be treated as the

distribution required for the employee's first distribution calendar year

(as defined in paragraph (b)). The minimum distribution for other

distribution calendar years, including the minimum distribution for the

distribution calendar year in which the employee's required beginning date

occurs, must be made on or before December 31 of that distribution

calendar year.

(d) LIFE EXPECTANCY. The applicable life expectancy is the life expectancy

(or joint life and last survivor expectancy) determined in accordance with

E-1 through E-5, reduced by one for each calendar year which has elapsed

since the date on which the life expectancy (or joint and last survivor

expectancy) was calculated. However, pursuant to E-6 through E-8, life

expectancy is recalculated, the applicable life expectancy will be the

life expectancy as so recalculated.

(e) ANNUITY CONTRACTS.--

(1) Instead of satisfying F-1, the minimum distribution requirement

may be satisfied by purchase with the employee's benefit of an

annuity contract from an insurance company in accordance with F-4.

Only a purchase of an annuity contract will insure that distribution

can be made over the employee's or a beneficiary's life, or joint

lives if applicable.

(2) If an annuity is purchased on or before the date when

distributions are required to commence (the required beginning date,

in the case of distributions before death, or the date determined

under C-3, in the case of distributions after death), distribution

under the annuity contract purchased will satisfy section 401(a)(9)

if payments under the annuity contract are made in accordance with F-

(3) As explained in F-3A(b) with reference to distributions after

death which must be made at least as rapidly as under the method used

under section 401(a)(9)(A)(ii), unless life expectancy is being

recalculated, if the annuity contract is purchased after the date on

which distributions are required to commence, the annuity contract

purchased may not be a life annuity and must be payable for a term

certain not exceeding the remaining applicable life expectancy. The

remaining applicable life expectancy is the applicable life

expectancy described in paragraph (d) which would have been used, if

the annuity contract had not be purchased, to determine the minimum

distribution in accordance with paragraphs (a) through (c) for the

first distribution calendar year in which the annuity contract is

purchased.

(4) If the annuity contract is purchased after the date on which

distributions are required to commence and life expectancy is being

recalculated, distribution under the contract will satisfy section

401(a)(9) if the contract is a life annuity payable either (i) over

the life (or lives) of the individual (or individuals) whose life

expectancy is being recalculated (with or without a period certain

that meets the requirements of subparagraph (3)) or (ii) for a term

certain determined under subparagraph (3).

(5) If an annuity is purchased on or after the employee's required

beginning date with a period certain feature, the period certain may

not be lengthened after the date of the initial purchase of

exchanging the annuity contract for an annuity contract with a longer

period certain even if the original period certain was shorter than

the maximum permitted.

F-2. Q. If an employee's benefit is in the form of an individual account

and in any calendar year the amount distributed exceeds the minimum

required, will credit be given in subsequent years for such excess

distribution?

A. If, in any calendar year, the amount distributed exceeds the minimum

required, no credit will be given in subsequent years for such excess

distribution. However, in the case in which the employee's first

distribution calendar year is the calendar year immediately preceding the

employee's required beginning date, amounts distributed in the employee's

first distribution calendar year will be credited toward the distribution

required to be made on or before the employee's required beginning date

for the employee's first distribution calendar year.

F-3. Q. How must annuity distributions under a defined benefit plan be

paid in order to satisfy section 401(a)(9)?

A.--

(a) In order to satisfy section 401(a)(9), annuity distributions under a

defined benefit plan must be paid in periodic payments made at intervals

not longer than one year (payment intervals) for a life (or lives), or

over a period certain not longer than a life expectancy (or joint life and

last survivor expectancy) described in section 401(a)(9)(A)(ii) or section

401(a)(9)(B)(iii), whichever is applicable. The life expectancy (or joint

life and last survivor expectancy) for purposes of determining the length

of the period certain will be determined in accordance with E-1 through E-

5, without recalculation of life expectancy. Once payments have commenced

over a period certain, the period certain may not be lengthened even if

the period certain is shorter than the maximum permitted. Payments must be

either nonincreasing or increase only as follows: (1) With any percentage

increase in a specified and generally recognized cost-of-living index,

(2) To the extent of the reduction in the amount of the employee's

payments to provide for a survivor benefit upon death, but only if the

beneficiary whose life was being used to determine the period described in

section 401(a)(9)(A)(ii) over which payments were being made dies and the

payments continue otherwise in accordance with that section over the life

of the employee, (3) to provide cash refunds of employee contributions

upon the employee's death, or (4) Because of an increase in benefits

under the plan. Also see F-4A for additional requirements for

distributions in the form of an annuity which must be satisfied in order

for the distribution to satisfy the minimum distribution incidental

benefit. If distribution is permitted to be made over the lives of the

employee and the designated beneficiary, references to a life annuity

herein include a joint and survivor annuity for purposes of section

401(a)(9).

(b) The annuity may be a life annuity with a period certain if the life

(or lives, if applicable) and period certain each meet the requirements of

paragraph (a).

period certain) will not be found to be increasing merely because the

amount of the payments vary with the investment performance of the

underlying assets. However, the Commissioner may prescribe additional

requirements applicable to such variable life annuities.

(d)--

(1) If the annuity is a life annuity (or a life annuity with a period

certain not exceeding 20 years), the following rule will apply. The

first payment which must be made on or before the employee's required

beginning date must be the payment which is required for one payment

interval. The second payment need not be made until the end of the

next payment interval even if that payment interval ends in the next

calendar year. Similarly, in the case of distributions commencing

after death in accordance with section 401(a)(9)(B)(iii) and (iv),

the first payment that must be made on or before the date determined

under C-3(a) or (b) (whichever is applicable) must be the payment

which is required for one payment interval. Payment intervals are the

periods for which payments are received, e.g., bimonthly, monthly,

semi-annually, or annually.

(2) If the annuity is a period certain annuity without a life

contingency (or is a life annuity with a period certain exceeding 20

years), periodic payments for each distribution calendar year (as

defined in F-1(b) will be combined and treated as an annual amount.

Such annual amount must meet the requirements of paragraph (a). The

amount which is required to be distributed on or before the

employee's required beginning date is the annual amount for the

employee's first distribution calendar year (as defined in F-1(b)).

The annual amount for other distribution calendar years, including

the annual amount which is for the calendar year in which the

employee's required beginning date occurs, must be distributed on or

before December 31 of the calendar year for which the distribution is

required. Similarly, in the case of such distributions commencing

after death in accordance with section 401(a)(9)(B)(iii) and (iv),

the amount which is required to be distributed on or before the date

determined under C-3(a) or (b), whichever is applicable, is the

annual amount for the beneficiary's first distribution calendar year.

(3) This paragraph is illustrated by the following examples:

EXAMPLE (1). A defined benefit plan (Plan X) provides monthly

annuity payments of $500 for the life of unmarried participants

with a 10 year period certain. An unmarried participant (A) in

the plan (Z) attains age 70 1/2 in 1990. In order to meet the

requirements of this paragraph, the first payment which must be

made on or before April 1, 1991 will be $500 and the payments

must continue to be made in monthly payments of $500 thereafter

for the life and 10 year certain period.

EXAMPLE (2). The facts are the same as in Example (1), except

that the annuity is an optional form of payment elected by Z

which provides for annuity payments of $700 a month for a 10

year period certain, without a life contingency. In such case,

in order to meet the requirements of this paragraph, the

monthly payments of $700 a month for each calendar year will be

combined and treated as an annual amount of $8,400 a year. On

or before April 1, 1987, Z must be paid $8,400, the annual

amount for 1986. The annual amount for calendar year 1987 of

$8,400 must be distributed on or before December 31, 1987.

(e) If distributions from a defined benefit plan are not in the form of an

annuity, the employee's benefit will be treated as an individual account

for purposes of determining the minimum distribution. See F-1 to determine

the minimum distribution if distribution is being made over life

expectancy.

F-3A. Q. How must distributions be made after the employee's death in

order to be considered to satisfy the requirement that the employee's

remaining interest be distributed at least as rapidly as under the

distribution method being used under section 401(a)(9)(A)(ii) as of the

date of the employee's death?

A.--

(a) GENERAL RULE. After the employee's death, the requirement that the

employee's remaining interest be distributed at least as rapidly as under

the method of distribution being used under section 401(a)(9)(A)(ii) as of

the date of the employee's death will be considered to be satisfied if the

employee's remaining interest is distributed in accordance with either

paragraph (b) or (c).

(b) INDIVIDUAL ACCOUNT--

(1) GENERAL RULE. Except as otherwise provided in subparagraph (2),

if the employee's benefit is in the form of an individual account

and, as of the date of the employee's death, distributions had

commenced in accordance with F-1, the employee's remaining interest

must continue to be distributed in accordance with F-1. If, before

the employee's death, the divisor being used to determine the amount

which was required to be distributed was the applicable divisor

pursuant to Q&A-4 of section 1.401(a)(9)-2 rather than the applicable

life expectancy determined under F-1, the required distributions

after the employee's death may be determined without regard to

section 1.401(a)(9)-2 using the applicable life expectancy determined

under F-1 as the relevant divisor.

(2) PURCHASED ANNUITY CONTRACT.--

(i) The employee's remaining interest will be treated as

distributed in accordance with F-1 if it (A) is distributed

under an immediate annuity contract that makes payments for a

period certain that satisfy F-3 and (B) is purchased at any

time with the employee's remaining benefits. The period over

which the annuity contract makes payments may not exceed the

applicable life expectancy that would have been used to

determine the minimum distribution under F-1 for the

distribution calendar year in which the annuity is purchased

(purchase year). Further, in the purchase year, the amount

distributed (when combined with amounts distributed in the

purchase year before the immediate annuity contract is

purchased) must equal (or exceed) the lesser of (C) the amount

required to be distributed for such purchase year under F-1 or

(D) the amount of the annual amount for the purchase year

determined under F-3(d)(2). If the employee's life expectancy

is being recalculated in the purchase year, the applicable

life expectancy is the life expectancy (or joint life and last

survivor expectancy) as recalculated, in accordance with E-8,

after the employee's death.

(ii) If the designated beneficiary is the surviving spouse and

the spouse's life expectancy is being recalculated, the annuity

contract must satisfy (i) except that it may be a life annuity

(with or without a period certain) payable over the remaining

life of the surviving spouse.

employee's benefit was being distributed as an annuity in accordance with

F-3 (and F-4, if applicable), annuity distribution of the employee's

remaining benefit must continue to be made (except for acceleration) in

accordance with F-3 (and F-4, if applicable) for the remainder of the

period under the annuity as of the date of the employee's death.

(d) EXAMPLES. This F-3A is illustrated by the following examples:

EXAMPLE (1).--

(a) An employee (X) was born February 1, 1919. His required

beginning date is April 1, 1990. As permitted by the plan, he

elects not to recalculate life expectancy Pursuant to E-1, life

expectancy is determined using X's and X's designated

beneficiary's attained ages as of their birthdays in calendar

year 1989. The joint life and last survivor expectancy using

such ages is 22 years under Table VI of section 172-9. X dies

on January 1, 1991 after receiving his minimum distribution

from X's account for calendar year 1989 on April 1, 1990, and

his minimum distribution from X's account for calendar year

1990 on December 31, 1990. His remaining benefit, determined in

accordance with F-5, for purposes of determining the minimum

distribution for calendar year 1991 is $20,000. Distribution of

his benefit, after his death, must continue to be distributed

in accordance with F-1 over the remaining 20 years of the joint

life and last survivor expectancy of X and X's designated

beneficiary. The minimum distribution for calendar year 1989 is

$1,000 ($20,000 divided by 20).

(b) Alternatively, in calendar year 1991, the plan may

distribute to X's designated beneficiary an immediate annuity

contract purchased with X's remaining benefit which makes

payments for a term certain not exceeding 20 years provided

that the payments satisfy F-3 Assuming no amount is distributed

in 1991 prior to the distribution of the annuity contract, the

amount paid under the annuity contract in 1991 must equal or

exceed the lesser of (1) $1,000 or (2) the annual amount

payable under the annuity contract. If instead of purchasing an

annuity in 1991 the plan is distributed the $1,000 minimum

distribution for calendar year to X's designated beneficiary,

the plan may still distribute an immediate annuity in calendar

year 1992. However, in such case, any period certain under the

annuity contract must be for no more than 19 years.

EXAMPLE (2). The facts are the same as in Example (1) except that

Plan B is a defined benefit plan. On April 1, 1990 annuity

distributions commence to X under a life annuity for the life of X

with a 10 year term certain. After X's death the annuity

distributions must continue to be made over the remaining years in

the 10 year certain period even though the term certain originally

could have been for 22 years and still have satisfied section

401(a)(9)(A)(ii).

F-4. Q. May distributions be made from an annuity contract which is

purchased from an insurance company?

A. Yes. Distributions may be made from an annuity contract which is

purchased by the plan from an insurance company with the employee's

benefit and which makes payments that satisfy the provisions of F-3.

However, if the payments actually made under the annuity contract do not

meet the requirements of section 401(a)(9), the plan fails to satisfy

section 401(a)(9).

F-4A. Q. Must distributions be made in accordance with the minimum

distribution incidental benefit requirement under section 1.401(a)(9)-2 in

order to satisfy section 401(a)(9)?

A. Yes. Section 401(a)(9)(G) provides that any distribution required

under the incidental benefit requirements of section 401(a) shall be

treated as a distribution required under section 401(a)(9). Consequently,

in order to satisfy section 401(a)(9), distributions must be made in

accordance with minimum distribution incidental benefit requirement (MDIB

requirement) in section 1.401(a)(9)-2 in addition to the minimum

distribution requirements in this section 1.401(a)(9)-1. (b) This

Question and Answer is illustrated by the following example.

EXAMPLE--

(a) Employee (X) is a participant in a qualified profit-sharing plan

(Plan A). Plan A provides that life expectancies are not

recalculated. X born December 1, 1918 is age 71 as of his birthday in

the calendar year he attains age 70 1/2. As of April 1, 1990, X's

only beneficiary designated to the plan is his granddaughter (Y) born

January 1, 1979. X's benefit under Plan A to be used to determine the

minimum distribution for 1989 (determined under F-5) is $25,300.00

(b) In order to satisfy the MDIB requirement in section 1.401(a)(9)-2

and the minimum distribution requirements in this section 1.401(a)(9)-

1 distribution of X's entire interest must be distributed as follows.

Distribution must commence not later than April 1, 1990 (X's required

beginning date determined under B-2 and B-3). The distribution for

1989 (X's first distribution calendar year determined under F-1) must

be calculated by dividing X's benefit of $25,300 by the lesser of (1)

the applicable divisor from the table in Q&A-4 of section 1.401(a)(9)-

2 and (2) the applicable life expectancy determined under F-1. The

applicable divisor from the table in Q&A-4 of section 1.401(a)(9)-2

for an employee age 71 is 25.3. The applicable life expectancy is

71.8 (the joint life and last survivor expectancy from Table IV of

section 1.72-9 of X and Y using their attained ages as of their

birthdays in 1989 (the year X obtained age 70 1/2) of 71 and 10).

Thus the minimum distribution for 1989 is $1,000 (25,300 divided by

25.3). $1,000 is distributed to X by Plan A on April 1, 1990. (c)

X's benefit to be used to determine the minimum distribution for 1990

(determined under F-5 including the adjustment for the distribution

on April 1, 1990) is $26,803.00. The minimum distribution for 1990

must be made by December 31, 1990. The minimum distribution from 1990

is determined by dividing X's benefit of 26,803.00 by the lesser of

(1) the applicable divisor from the table in Q&A-4 of section

1.401(a)(9)-2 for an employee age 72 and (2) the applicable life

expectancy determined under F-1. The applicable divisor from the

table in Q&A-4 of section 1.401(a)(9)-2 for an employee age 72 is

24.4. The applicable life is 70.8 (71.8 reduced by one the number of

years elapsed since the calendar year X attained age 70 1/2). Thus

the minimum distribution for 1990 is $1,098.48 (26,803.00 divided by

24.4).

F-5. Q. What benefit is used for determining the employee's minimum

distribution in the case of an individual account?

A.--

(a) In the case of an individual account, the benefit used in determining

the minimum distribution for a distribution calendar year is the account

balance as of the last valuation date in the calendar year immediately

preceding any distribution calendar year (valuation calendar year)

adjusted as set forth below.

(b) The account balance is increased by the amount of any contributions or

forfeitures allocated to the account balance as of dates in the valuation

calendar year after the valuation date. Contributions include

contributions made after the close of the valuation calendar year which

are allocated as of dates in the valuation calendar year.

(c)--

(1) The account balance is decreased by distributions made in the

valuation calendar year after the valuation date.

(2)--

(i) The following rule applies if any portion of the minimum

distribution for the first distribution calendar year is made

in the second distribution calendar year (i.e., generally, the

distribution calendar year in which the required beginning date

as defined in section 401(a)(9)(C) occurs). In such case, for

purposes of determining the account balance to be used for

determining the minimum distribution for the second

distribution calendar year, distributions described in

paragraph (c)(1) shall include an additional amount. This

additional amount is equal to the amount of any distribution

made in the second distribution calendar year on or before the

required beginning date that is not in excess (when added to

the amounts distributed in the first calendar year) of the

amount required to meet the minimum distribution for the first

distribution calendar year.

(ii) This paragraph (c)(2) is illustrated by the following

example:

EXAMPLE.--

(a) Employee (X), born October 1, 1918, is a

participant in a qualified defined contribution plan

(Plan Z). X attains age 70 1/2 in calendar year 1989.

X's required beginning date is April 1, 1990. As of

the last valuation date under Plan Z in calendar year

1988, which was on December 31, 1988, the value of

X's account balance was $24,000. No contributions are

made or amounts forfeited after such date which are

allocated in calendar year 1988. No rollover amounts

are received after such date by Plan Z on X's behalf

which were distributed by a qualified plan or IRA in

calendar years 1988, 1989, or 1990. The joint life

and last survivor expectancy of X and X's designated

beneficiary is 24 years. The required minimum

distribution for calendar year 1989 is $1,000

($24,000 divided by 24). That amount is distributed

to X on April 1, 1990. On the same date, X elects not

to recalculate life expectancy, as permitted by the

plan.

(b) The value of X's account balance as of December

31, 1989 (the last valuation date under Plan Z in

calendar year 1989) is $26,400. No contributions are

made or amounts forfeited after such date which are

allocated in calendar year 1989. In order to

determine the benefit to be used in calculating the

minimum distribution for calendar year 1990, the

account balance of $26,400 will be reduced by $1,000,

the amount of the minimum distribution for calendar

year 1989 made on April 1, 1990. Consequently, the

benefit for purposes of determining the minimum

distribution for calendar year 1990 is $25,400. (c)

If, instead of $1,000 being distributed to X, $20,000

is distributed, the account balance of $26,400 would

still be reduced by $1,000 in order to determine the

benefit to be used in calculating the minimum

distribution for calendar year 1990. The amount of

the distribution made on April 1, 1990, in order to

meet the minimum distribution for 1989 would still be

$1,000. The remaining $19,000 ($20,000 - $1,000) of

the distribution is not the minimum distribution for

1989. Instead, the remaining $19,000 of the

distribution satisfies the minimum distribution

requirement with respect to X for calendar year 1990.

The amount which is required to be distributed for

calendar year 1990 is $1,1043.35 ($25,400 divided by

23). Consequently, no additional amount is required

to be distributed to X in 1990 because $19,000

exceeds $1,105.26. However, pursuant to F-2, the

remaining $17,895.65 ($19,000 - $1,104.35) may not be

used to satisfy the minimum distribution requirements

for calendar year 1991 or any subsequent calendar

years. (d) If an amount is distributed by one plan

and rolled over to another plan (receiving plan), G-2

provides additional rules for determining the benefit

and minimum distribution under the receiving plan. If

an amount is transferred from one plan (transferor

plan) to another plan (transferee plan), G-3 and G-4

provide additional rules for determining the minimum

distribution and the benefit under both the

transferor and transferee plans.

F-6. Q. If a portion of an employee's benefit is not vested as of the

employee's required beginning date, how is the determination of the

minimum required distribution affected?

A.--

(a) If the employee's benefit is in the form of an individual account, the

benefit used to determine the minimum distribution required for any

distribution calendar year will be determined in accordance with F-5

without regard to whether or not any portion of the employee's benefit is

not vested. If any portion of the employee's benefit is not vested,

distributions will be treated as being paid from the vested portion of the

benefit first. If, as of the end of a distribution calendar year (or as of

the employee's required beginning date, in the case of the employee's

first distribution calendar year), the total amount of the employee's

vested benefit is less than the minimum distribution required for the

calendar year, only the vested portion of the employee's benefit is

required to be distributed by the end of the calendar year (or, if

applicable, by the employee's required beginning date). Further, if no

portion of the employee's benefit is vested as of that date, no

distribution is required as of that date. However, in the calendar year

when an amount becomes vested, the amount required to be distributed in

such calendar year will include the additional amount. Such additional

amount will equal the lesser of (1) the vested portion of the employee's

benefit, and (2) the sum of amounts not distributed in prior calendar

years because the employee's vested benefit was less than the minimum

required distribution. In such case, an adjustment for the additional

amount distributed which corresponds to the adjustment described in F-

5(c)(2) will be made to the benefit used to determine the minimum

distribution for that calendar year.

(b) In the case of annuity distributions from a defined benefit plan, if

any portion of the employee's benefit is not vested as of December 31 of a

distribution calendar year (or as of the employee's required beginning

date in the case of the employee's first distribution calendar year), the

portion which is not vested as of such date will be treated as not having

accrued for purposes of determining the minimum distribution for that

distribution calendar year. When an additional portion of the employee's

benefit becomes vested, such portion will be treated as an additional

accrual. See F-7 for the rules for distributing benefits which accrue

under a defined benefit plan after the employee's required beginning date.

F-7. Q. In the case of annuity distributions under a defined benefit plan,

how must additional benefits which accrue after the employee's required

beginning date be distributed in order to satisfy section 401(a)(9)? A. In

the case of annuity distributions under a defined benefit plan, if any

additional benefits accrue after the employee's required beginning date,

distribution of such amount as a separate identifiable component must

commence in accordance with F-3 beginning with the first payment interval

ending in the calendar year immediately following the calendar year in

which such amount accrues.

G. ROLLOVERS AND TRANSFERS

G-1. Q. If an amount is distributed by one plan (distributing plan) and is

rolled over to another plan, is the benefit or the minimum distribution

under the distributing plan affected by the rollover?

A. No. If an amount is distributed by one plan and is rolled over to

another plan, the amount distributed is still treated as a distribution

by the distributing plan, notwithstanding the rollover.

G-1A. Q. If the amount is distributed by a plan in a distribution calendar

year of that plan and rolled over to another plan, what amount will be

treated as a minimum distribution required under section 401(a)(9) which

may not be rolled over pursuant to section 402(a)(5)(G)?

A.--

(a) Except as otherwise provided in paragraphs (b) and (c), all amounts

distributed in a distribution calendar year will be treated for purposes

of section 402(a)(5)(G) as being required under section 401(a)(9) until

the total amount distributed in such calendar year exceeds the total

amount which is required to be distributed for such distribution calendar

year in order to satisfy section 401(a)(9).

(b) In the case of any distribution in an employee's second distribution

calendar year, the amounts distributed in such calendar year which will be

treated for purposes of section 402(a)(5)(G) as being required under

section 401(a)(9) will include the sum of (1) the amount required to be

distributed for the second distribution calendar year and (2) the amount

required to be distributed for the employee's first distribution calendar

year (to the extent such amount is not distributed in the first

distribution calendar year).

under section 401(a)(9) is not distributed, such amount will be treated as

an amount which is required to be distributed in the next calendar year

for purposes of section 402(a)(5)(G). (d) If the employee's entire

benefit is distributed in the employee's first and second distribution

calendar year but before the employee's required beginning date, the

amount distributed which will be treated as an amount which is required to

be distributed under section 401(a)(9) for purposes of section

402(a)(5)(G) will be determined using the designated beneficiary of the

employee, if any, under the plan (or individual retirement plan) receiving

the rollover contribution.

G-1B. What are the tax consequences under section 402(a) and 408(d) to an

employee who rolls over an amount which is required under section

401(a)(9)?

A. The tax consequences under section 402(a) and 408(d) to an employee

who rolls over an amount which is required to be distributed under

section 401(a)(9) are as follows:

(a) The amount which is required to be distributed under section 401(a)(9)

is taxable under section 72 in the taxable year in which distributed

without regard to the rollover.

(b) If the amount which is required to be distributed under section

401(a)(9) is contributed to an individual retirement plan as a rollover

contribution, such amount will be treated as a contribution to an

individual retirement plan which is not a rollover contribution and thus

will be an excess contribution for purposes of section 4973 if the amount

is not deductible under section 219 or may not be treated as a

nondeductible contribution under section 408(o). Of course, if the amount

is an excess contribution, it may be withdrawn with earnings from the

account before the due date of the employee's return pursuant to section

408(d)(4) in order to avoid imposition of the excise tax under section

4973.

G-2. Q. If an amount is distributed by one plan (distributing plan) and is

rolled over to another plan (receiving plan), how are the benefit and the

minimum distribution under the receiving plan affected?

A.--

(a) Except as otherwise provided in paragraph (b), if an amount is

distributed by one plan (distributing plan) and is rolled over to another

plan (receiving plan), the benefit of the employee under the receiving

plan is increased by the amount rolled over. However, the distribution has

no impact on the minimum distribution required to be made by the receiving

plan for the calendar year in which the rollover is received. But, if a

minimum distribution is required to be made by the receiving plan for the

following calendar year, the rollover amount must be considered to be part

of the employee's benefit under the receiving plan. Consequently, for

purposes of determining any minimum distribution for the calendar year

immediately following the calendar year in which the amount rolled over is

received by the receiving plan, in the case in which the amount rolled

over is received after the last valuation date in the calendar year under

the receiving plan, the benefit of the employee as of such valuation date,

adjusted in accordance with F-5, will be increased by the rollover amount

valued as of the date of receipt. For purposes of calculating the benefit

under the receiving plan pursuant to the preceding sentence, if the amount

rolled over is received by the receiving plan in a different calendar year

from the calendar year in which it is distributed by the distributing

plan, the amount rolled over is deemed to have been received by the

receiving plan in the calendar year in which it was distributed by the

distributing plan.

(b) If an amount is distributed by the distributing plan after the

employees required beginning date under both the distributing plan and the

receiving plan, and the designated beneficiary of the employee under the

receiving plan is a designated beneficiary with a life expectancy that is

longer than the life expectancy of the designated beneficiary under the

distributing plan, the following rule will apply. In such case, the

receiving plan must separately account for the amount rolled over and

treat it as a separate benefit. It must then begin distribution of such

separate benefit in the calendar year following the calendar year in which

the amount rolled over was distributed by the distributing plan. The

separate benefit attributable to the rollover amount must be distributed

over a period not exceeding the period (including any adjustments for

recalculation under section 401(a)(9)(D), if applicable) used by the

distributing plan to determine the employee's minimum distribution with

respect to the benefit attributable to the amount rolled over. For

purposes of determining the life expectancies or lives used to determine

the minimum distribution under the receiving plan, the designated

beneficiary under the distributing plan will be the designated beneficiary

under the receiving plan (with respect to the benefit attributable to the

amount rolled over). If such beneficiary is changed under the receiving

plan to a different beneficiary from the designated beneficiary under the

distributing plan, or a beneficiary is added who was not a beneficiary

under the distributing plan, the rules in E-5 applicable to changes in

beneficiaries will be used to determine the period over which

distributions must be made by the receiving plan.

G-3. Q. In the case of a transfer of an amount of an employee's benefit

from one plan (transferor plan) to another plan (transferee plan), are

there any special rules for satisfying the minimum distribution

requirement or determining the employee's benefit under the transferor

plan?

A.--

(a) In the case of a transfer of an amount of an employee's benefit from

one plan to another, the transfer is not treated as a distribution by the

transferor plan for purposes of section 401(a)(9). Instead, the benefit of

the employee under the transferor plan is decreased by the amount

transferred. However, if any portion of an employee's benefit is

transferred in a distribution calendar year with respect to that employee,

in order to satisfy section 401(a)(9), the transferor plan must determine

the amount of the minimum distribution with respect to that employee for

the calendar year of the transfer using the employee's benefit under the

transferor plan before the transfer. Additionally, if any portion of an

employee's benefit is transferred in the employee's second distribution

calendar year but on or before the employee's required beginning date, in

order to satisfy section 401(a)(9), the transferor plan must determine the

amount of the minimum distribution requirement for the employee's first

distribution calendar year based on the employee's benefit under the

transferor plan before the transfer. The transferor plan may satisfy the

minimum distribution requirement for the calendar year of the transfer

(and the prior year if applicable) by segregating the amount which must be

distributed from the employee's benefit and not transferring that amount.

Such amount may be retained by the transferor plan and distributed on or

before the date required or paid to an escrow account which in turn

distributes such amount on or before the date required.

(b) For purposes of determining any minimum distribution for the calendar

year immediately following the calendar year in which the transfer occurs,

in the case of a transfer after the last valuation date for the calendar

year of the transfer under the transferor plan, the benefit of the

employee as of such valuation date, adjusted in accordance with F-5, will

be decreased by the amount transferred valued as of the date transferred.

G-3A. Q. What are the excise tax consequences for an employee (or other

distributee) if, before transferring a portion of an employee's benefit in

a distribution calendar year, the transferor plan does not satisfy the

minimum distribution requirement for the calendar year of the transfer

(and, if applicable, the prior calendar year)?

A. If the transferor plan does not satisfy the minimum distribution for

the calendar year of transfer (and, if applicable, the prior calendar

year) in accordance with G-3, the amount required to be distributed to

satisfy the minimum distribution requirement for the calendar year of the

transfer (and, if applicable, the prior calendar year) will be treated

for purposes of section 4974 as a minimum distribution that was not

distributed. Consequently, the payee with respect to such amount will be

subject to the excise tax imposed under section 4974.

G-4. Q. If an amount of an employee's benefit is transferred from one plan

(transferor plan) to another plan (transferee plan), how are the benefit

and the minimum distribution under the transferee plan affected?

A.--

(a) Except as otherwise provided in paragraph (b), in the case of a

transfer from one plan (transferor plan) to another (transferee plan), the

general rule is that the benefit of the employee under the transferee plan

is increased by the amount transferred. The transfer has no impact on the

minimum distribution required to be made by the transferee plan in the

calendar year in which the transfer is received. However, if a minimum

distribution is required from the transferee plan for the following

calendar year, the transferred amount must be considered to be part of the

employee's benefit under the transferee plan. Consequently, for purposes

of determining any minimum distribution for the calendar year immediately

following the calendar year in which the transfer occurs, in the case of a

transfer after the last valuation date of the transferee plan in the

transfer calendar year, the benefit of the employee under the receiving

plan valued as of such valuation date, adjusted in accordance with F-5,

will be increased by the amount transferred valued as of the date

transferred.

(b) If an amount is transferred after the employee's required beginning

date under both the transferor plan and the transferee plan, and the

designated beneficiary of the employee under the transferee plan is a

designated beneficiary with a life expectancy that is longer than the life

expectancy of the designated beneficiary under the transferor plan, the

following rule will apply. The transferee plan must separately account for

the amount rolled over and treat it as a separate benefit. The transferee

plan must then begin distribution of such separate benefit in the calendar

year following the calendar year in which the amount was transferred. This

benefit attributable to the transferred amount must be distributed over a

period not exceeding the period (including any adjustments for

recalculation under section 401(a)(9)(D), if applicable) used by the

transferor plan to determine the employee's minimum distribution with

respect to the benefit attributable to the amount transferred. For

purposes of determining the life expectancies or lives used to determine

the minimum distribution under the transferee plan, the designated

beneficiary under the transferor plan will be the designated beneficiary

under the transferee plan (with respect to the benefit attributable to the

amount transferred). If such beneficiary is changed under the transferee

plan to a different beneficiary from the designated beneficiary under the

transferor plan or a beneficiary is added who was not a beneficiary under

the transferor plan, the rules in E-5, applicable to changes in

beneficiaries, will be used to determine the period over which

distributions must be made by the transferee plan.

G-5. Q. How are a spinoff, merger or consolidation (as defined in section

1.414(l)-1) treated for purposes of determining an employee's benefit and

minimum distribution under section 401(a)(9)?

A. For purposes of determining an employee's benefit and minimum

distribution under section 401(a)(9), a spinoff, a merger, or a

consolidation (as defined in section 1.414(l)) will be treated as a

transfer of the benefits of the employees involved. Consequently, the

benefit and minimum distribution of each employee involved under the

transferor and transferee plans will be determined in accordance with G-3

and G-4.

H. SPECIAL RULES

H-1. Q. What distribution rules apply if an employee is a participant in

more than one plan?

A. If an employee is a participant in more than one plan, the plans in

which the employee participates may not be aggregated for purposes of

testing whether or not the distribution requirements of section 401(a)(9)

are met. The distribution of the benefit of the employee under each plan

must separately meet the requirements of section 401(a)(9).

H-2. Q. If an employee's benefit under a plan is divided into separate

accounts (or segregated shares in the case of a defined benefit plan), do

the distribution rules in section 401(a)(9) and these regulations apply

separately to each separate account (or segregated share)?

A.--

(a) Except as otherwise provided in paragraphs (b) and (c), if an

employee's benefit under a plan is divided into separate accounts (or

segregated shares in the case of a defined benefit plan), the separate

accounts (or segregated shares) will be aggregated for purposes of

satisfying the rules in section 401(a)(9). Thus, except as otherwise

provided in paragraphs (b) and (c), all separate accounts, including a

separate account for nondeductible employee contributions (under section

72(e)(9)) or for qualified voluntary employee contributions (as defined in

section 219(e)(2)), will be aggregated for purposes of section 401(a)(9).

(b) If, as of an employee's required beginning date or, in the case of

distributions under section 401(a)(9)(B)(ii) or (iii) and (iv), as of the

employee's (or spouse's where applicable) date of death, the beneficiaries

with respect to a separate account (or segregated share in the case of a

defined benefit plan) differ from the beneficiaries with respect to the

other separate accounts (or segregate shares) of the employee, such

separate account (or segregated share) need not be aggregated with other

separate accounts (or segregated shares) in order to determine whether the

distributions from such separate account (or segregated share) satisfy

section 401(a)(9). Instead, the rules in section 401(a)(9) may separately

apply to such separate account (or segregated share). Thus, for example,

if the employee designated a different beneficiary for each separate

account (or segregated share), each separate account (or segregated share)

may be distributed over the joint life (or joint life and last survivor

expectancy) of the employee and the designated beneficiary (or the life or

life expectancy of the designated beneficiary in the case of any

distribution described in section 401(a)(9)(B)(iii) and (iv)) for that

separate account (or segregated share). Further, for example, if, in the

case of a distribution described in section 401(a)(9)(B)(iii) and (iv),

the only designated beneficiary of a separate account (or segregated

share) is the employee's surviving spouse, and beneficiaries other than

the surviving spouse are designated with respect to the other separate

accounts of the employee, distribution of the spouse's separate account

(or segregated share) need not commence until the date determined under

the first sentence in C-3(b) even if distribution of the other separate

accounts (or segregated shares) must commence at an earlier date. Also,

for example, in the case of a distribution after the death of an employee

to which section 401(a)(9)(B)(i) does not apply, distribution from a

separate account (or segregated share) of an employee may be made over a

beneficiary's life expectancy in accordance with section 401(a)(9)(B)(iii)

and (iv) even through distributions from other separate accounts (or

segregated shares) with different beneficiaries are being made in

accordance with the five-year rule in section 401(a)(9)(B)(ii).

from separate accounts maintained because of a transfer or rollover.

H-2A. Q. What is a separate account or segregated share for purposes of

section 401(a)(9)?

A.--

(a) For purposes of section 401(a)(9) a separate account in an individual

account is a portion of an employee's benefit determined by an acceptable

separate accounting including allocating investment gains and losses, and

contributions and forfeitures, on a pro rata basis in a reasonable and

consistent matter between such portion and any other benefits. Further,

the amounts of each such portion of the benefit will be separately

determined for purposes of determining the amount of the minimum

distribution in accordance with F-5.

(b) A benefit in a defined benefit plan is separated into segregated

shares if it consists of separate identifiable components which may be

separately distributed.

H-3. Q. Must a distribution that is required by section 401(a)(9) to be

made by the required beginning date to the participant or that is required

by section 401(a)(9)(B)(ii) to be made by the required time to a

designated beneficiary who is a surviving spouse be made notwithstanding

the failure of the participant, or spouse where applicable, to consent to

a distribution while a benefit is immediately distributable?

A. Yes. Section 411(a)(11) and section 417(e) (see section 1.411(a)(11)-

1T(c)(2) and section 1.417(e)-1T(c)) require participant and spousal

consent to certain distributions of plan benefits while such benefits are

immediately distributable. If a participant's normal retirement age is

later than the required beginning date for the commencement of

distributions under section 401(a)(9) and, therefore, benefits are still

immediately distributable, the plan must, nevertheless, distribute plan

benefits to the participant (or where applicable, to the spouse) in a

manner that satisfies the requirements of section 401(a)(9). Section

401(a)(9) must be satisfied even though the participant (or spouse, where

applicable) fails to consent to the distribution. In such a case, the

plan may distribute in the form of a qualified joint and survivor annuity

(QJSA) or in the form of a qualified preretirement survivor annuity

(QPSA) and the consent requirements of sections 411(a)(11) and 417(e) are

deemed to be satisfied if the plan has made reasonable efforts to obtain

consent from the participant (or spouse if applicable) and if the

distribution otherwise meets the requirements of section 417. If, because

of section 401(a)(11)(B), the plan is not required to distribute in the

form of a QJSA to a participant or a QPSA to a surviving spouse, the plan

may distribute the minimum amount required at the time required to

satisfy section 401(a)(9) and the consent requirements of sections

411(a)(11) and 417(e) are deemed to be satisfied if the plan has made

reasonable efforts to obtain consent from the participant (or spouse if

applicable) and if the distribution otherwise meets the requirements of

section 417.

H-3A. Q. Who is an employee's spouse or surviving spouse for purposes of

section 401(a)(9)?

A. Except as otherwise provided in H-4(a) in the case of distributions of

a portion of an employee's benefit payable to a former spouse of an

employee pursuant to a qualified domestic relations order, for purposes

of section 401(a)(9), an individual is a spouse or surviving spouse of an

employee if such individual is treated as the employee's spouse under

applicable state law as of the following dates, whichever is applicable.

Sections 401(a)(11)(D) and 417(d) do not apply for purposes of

determining who is an employee's spouse or surviving spouse under section

401(a)(9). In the case of distributions before the death of an employee

under section 401(a)(9)(A)(ii), for purposes of determining whether the

designated beneficiary's life expectancy may be recalculated, the spouse

of the employee is determined as of the employee's required beginning

date. In the case of distributions after the death of an employee, for

purposes of determining whether, under the exception to the five-year

rule in section 401(a)(9)(B)(iii) and (iv), the provisions of clause (iv)

apply, the spouse of the employee is determined as of the date of death

of the employee

H-4. Q. In order to satisfy section 401(a)(9), are there any special rules

which apply to the distribution of all or a portion of an employee's

benefit payable to an alternate payee pursuant to a qualified domestic

relations order as defined in section 414(p) (QDRO)?

A.--

(a) A former spouse to whom all or a portion of the employee's benefit is

payable pursuant to a QDRO will be treated as a spouse (including a

surviving spouse) of the employee for purposes of section 401(a)(9).

(b)--

(1) If a QDRO provides that an employee's benefit is to be divided

and a portion is to be allocated to an alternate payee, such portion

will be treated as a separate account (or segregated share) which

separately must satisfy the requirements of section 401(a)(9) and may

not be aggregated with other separate accounts (or segregated shares)

of the employee for purposes of satisfying section 401(a)(9). Except

as otherwise provided in subparagraph (2), distribution of such

separate account allocated to an alternate payee pursuant to a QDRO

must be made in accordance with section 401(a)(9). For example, in

general, distribution of such account will satisfy section

401(a)(9)(A) if such account will be distributed, beginning not later

than the employee's required beginning date over the life of the

employee or over the lives of the employee and the alternate payee

(or over a period not extending beyond the life expectancy of such

employee or the joint life and last survivor expectancy of such

employee and alternate payee). Distribution of the separate account

will not satisfy section 401(a)(9)(A)(ii) if it is distributed over

the joint lives of the alternate payee and a designated beneficiary

(other than the employee). The determination of whether distribution

from such account after the death of the employee to the alternate

payee will be made in accordance with section 401(a)(9)(B)(i) or

section 401(a)(9)(B)(ii) or (iii) and (iv) will depend on whether

distributions have begun as determined under B-5 (which provides, in

general, that distributions are not treated as having begun until the

employee's required beginning date even though payments may actually

have begun before that date). Further, for example, if the alternate

payee dies before the date on which the designated beneficiary is

determined under D-3 or D-4 and distribution of the separate account

allocated to the alternate payee pursuant to the QDRO is to be made

to the alternate payee's beneficiary, such beneficiary may be treated

as a designated beneficiary for purposes of determining the minimum

distribution required from such account if the beneficiary of the

alternate payee is an individual and if such beneficiary is a

beneficiary under the plan or specified to or in the plan.

(Specification in the QDRO will also be treated as specification to

the plan.)

(2) Distribution of the separate account allocated to an alternative

payee pursuant to a QDRO will satisfy section 401(a)(9)(A) even

though distributions are made to the alternate payee rather than the

employee if the distribution otherwise meets the requirements of

section 401(a)(9)(A). Distribution of the separate account allocated

to an alternate payee pursuant to a QDRO will also meet the

requirements of section 401(a)(9)(A)(ii) if such account is to be

distributed, beginning not later than the employee's required

beginning date, over the life of the alternate payee (or over a

period not extending beyond the life expectancy of the alternative

payee). If the plan permits the employee to elect not to recalculate

life expectancies (life expectancies of the employee and the

employee's spouse) pursuant to E-7(c), such election is to be made

only by the alternate payee for purposes of distributing the separate

account allocated to such alternative payee pursuant to the QDRO.

Also, if the plan permits the employee to elect whether distribution

upon the death of the employee will be made in accordance with the

five-year rule in section 401(a)(9)(B)(ii) or the exception to the

five-year rule in section 401(a)(9)(B)(iii) and (iv) pursuant to C-

4(c), such election is to be made only by the alternate payee for

purposes of distributing the separate account allocated to the

alternate payee pursuant to the QDRO. If the alternate payee dies

after distribution of the separate account allocated to the alternate

payee pursuant to a QDRO has begun (determined under B-5),

distribution of the remaining portion of that portion of the benefit

allocated to the alternate payee must be made at least as rapidly

(determined under B-6) as under the method of distributions being

used as of the date of the alternate payee's death. As provided in

section 1.401(a)(9)-2, distribution of the separate account allocated

to an alternate payee pursuant to a QDRO need not satisfy the minimum

distribution incidental benefit rule as long as the distribution of

such account otherwise satisfies section 401(a)(9).

but merely provides that a portion of an employee's benefit (otherwise

payable to the employee) is to be paid to an alternate payee, such portion

will not be treated as a separate account (or segregated share) of the

employee. Instead, such portion will be aggregated with any amount

distributed to the employee and will be treated as having been distributed

to the employee for purposes of determining whether the minimum

distribution requirement has been satisfied with respect to that employee.

H-5. Q. Will a plan fail to qualify as a pension plan within the meaning

of section 401(a), solely because the plan permits distributions to

commence to an employee on or after April 1, of the calendar year

following the calendar year in which the employee attains age 70 1/2 even

though the employee has not retired or attained the normal retirement age

under the plan as of the date on which such distributions commence?

A. No. A plan will not fail to qualify as a pension plan within the

meaning of section 401(a), solely because the plan permits distributions

to commence to an employee on or after April 1 of the calendar year

following the calendar year in which the employee attains age 70 1/2 even

though the employee has not retired or attained the normal retirement age

under the plan as of the date on which such distributions commence. This

rule applies without regard to whether or not the employee is a 5-percent

owner with respect to the plan year ending in the calendar year in which

distributions commence.

H-6. Q. Is the distribution of an annuity contract a distribution for

purposes of section 401(a)(9)?

A. No. The distribution of an annuity contract is not a distribution for

purposes of section 401(a)(9).

H-7. Q. Will a payment by a plan after the death of an employee fail to be

treated as a distribution for purposes of section 401(a)(9) solely because

it is made to an estate or a trust?

A. A payment by a plan after the death of an employee will not fail to be

treated as a distribution for purposes of section 401(a)(9) solely

because it is made to an estate or a trust. As a result, the estate or

trust which receives a payment from a plan after the death of an employee

need not distribute the amount of such payment to the beneficiaries of

the estate or trust in accordance with section 401(a)(9)(B). However,

pursuant to D-2A, distribution to the estate must satisfy the five-year

rule in section 401(a)(9)(B)(iii) if the distribution to the employee had

not begun (as defined in B-5) as of the employee's date of death, and

pursuant to D-2A, an estate may not be a designated beneficiary. See D-5

and D-6 for provisions under which beneficiaries of a trust with respect

to the trust's interest in an employee's benefit are treated as having

been designated as beneficiaries of the employee under the plan. H-8. Q.

Will a plan fail to satisfy section 411 if the plan is amended to

eliminate benefit options that do not satisfy section 401(a)(9)? A.

Nothing in section 401(a)(9) permits a plan to eliminate for all

participants a benefit option that could not otherwise be eliminated

pursuant to section 411(d)(6). However, a plan must provide that,

notwithstanding any other plan provisions, it will not distribute

benefits under any option that does not satisfy section 401(a)(9). See A-

3. Thus, the plan, not withstanding section 411(d)(6), must prevent

participants from electing benefit options that do not satisfy section

401(a)(9). H-9. Q. Does section 401(a)(4) prevent a plan from

distributing benefits in any manner otherwise permitted under section

401(a)(9)? A. A plan may not distribute benefits to any employee in any

manner which results in discrimination prohibited under section 401(a)(4)

even if the distribution otherwise satisfies section 401(a)(9).

I. TRANSITION RULES

I-1. Q. Are there any special distribution rules for calendar years before

1988?

A. Yes. Minimum distributions required for calendar years 1985 and 1986

are not required to be made until December 31, 1987. Further, there are

special rules for determining the amount that is required to be

distributed for 1985 and 1986 (and with respect to certain employees for

1987). There are also special rules for determining the first

distribution calendar year with respect to certain employees. In the case

of an employee whose required beginning date is on or before April 1,

1987 and who is alive on December 31, 1987, see I-2 through I-5. In the

case of an employee who dies before January 1, 1988, see I-6 through I-

13. See I-14 through I-16 for other special transition rules.

I-2. Q. If an employee's required beginning date (see Q&A B-2 & 3) is on

or before April 1, 1987 and such employee is alive on December 31, 1987,

what is the first calendar year for which a distribution is required?

A. Except as provided in I-4 (special rule for certain life annuities),

the following rules apply for purposes of determining the first

distribution calendar year of an employee with a required beginning date

on or before April 1, 1987 if such employee is alive on December 31, 1987:

(a) PRE-1987 REQUIRED BEGINNING DATE. If an employee's required beginning

date was on or before April 1, 1986, the first distribution calendar year

is 1985. However, under these transition rules, the minimum distribution

for 1985 is not required to be made by April 1, 1986, and the minimum

distribution for 1986 is not required to be made by December 31, 1986.

Instead, the minimum distributions for calendar years 1985 and 1986 are

required to be made by December 31, 1987. Thus, the minimum distributions

for 1985, 1986, and 1987 must be made by December 31, 1987.

(b) 1987 REQUIRED BEGINNING DATE. If an employee's required beginning date

is April 1, 1987, the first distribution calendar year is 1986. However,

under these transition rules, the minimum distribution for 1986 is not

required to be made by April 1, 1987. Instead, the minimum distribution

for 1986 is required to be made by December 31, 1987. Thus, the minimum

distribution for 1986 and 1987 must be made by December 31, 1987.

I-3. Q. If (1) the employee is alive on December 31, 1987 and (2) the

employee's first distribution calendar year is 1985 or 1986 (as determined

under I-2), how is the amount of the minimum required distribution

determined for calendar years 1985, 1986, and 1987?

A.--

(a) IN GENERAL. If (1) the employee is alive on December 31, 1987 and (2)

the employee's first distribution calendar year is 1985 or 1986 (as

determined under I-2), the amount of the minimum distribution for calendar

years 1985, 1986, and 1987 is to be determined under one of the three

methods described in paragraphs (b), (c), and (d). The plan administrator

is to determine which method, including the credit rules under paragraphs

(b)(4) and (c)(3), is to be used. The same method used under this I-3 and

I-8 must be used with respect to all such employees covered by the plan.

See I-4 for a special amount of distribution rule for certain life

annuities.

(b) LIFE EXPECTANCY METHOD. Under the life expectancy method, the total

amount of the minimum distribution required for calendar years 1985, 1986,

and 1987 is determined as follows:

(1) DESIGNATED BENEFICIARY AND LIFE EXPECTANCY. The designated

beneficiary of the employee will be determined on any date in 1987.

The applicable life expectancy (either the life expectancy of the

employee or the joint life and last survivor expectancy of the

employee and the employee's designated beneficiary, whichever is

applicable) is determined using attained ages as of birthdays in

1987. In the case of a beneficiary who is not alive on his birthday

in 1987, the beneficiary is treated as being alive on that date for

purposes of determining life expectancy.

(2) BENEFIT DETERMINATION. The benefit of the employee is determined

using the account balance as of the last valuation date under the

plan in 1986, adjusted in accordance with F-5 with the following

further modifications. First, the benefit adjustment for

distributions after the valuation date under F-5(c) is not made.

Second, the benefit is increased by any distribution made in 1985 or

1986 before the valuation date for which credit is being taken under

subparagraph (4).

(3) REQUIRED DISTRIBUTION. The total amount which must be distributed

for calendar years 1985, 1986, and 1987 using the life expectancy

method is determined by dividing the benefit determined under

subparagraph (2) by the applicable life expectancy determined under

subparagraph (1) and multiplying the quotient by:

(i) 2.8, in the case of an employee with respect to whom the

first distribution calendar year is 1985, or

(ii) 1.9, in the case of an employee with respect whom the

first distribution calendar year is 1986.

(4) CREDIT FOR DISTRIBUTIONS. In determining whether the total amount

which must be distributed for calendar years 1985, 1986, and 1987 has

been distributed, credit may be taken (as determined by the plan

administrator) for any amount distributed in a distribution calendar

year of the employee. Consequently, to determine the amount which is

required to be distributed in calendar year 1987, the plan

administrator may reduce the total amount which must be distributed

in 1987 for calendar years 1985, 1986, and 1987 (determined under

(3)) by the amounts distributed in:

(i) 1985 and 1986, in the case of an employee with respect to

whom the first distribution calendar year is 1985, or

(ii) 1986, in the case of an employee with respect to whom the

first distribution calendar year is 1986. However, in the case

of distributions before the last valuation date in 1986, credit

may only be taken for amounts which were used to increase the

benefit pursuant to subparagraph (2).

the minimum distribution required for calendar years 1985, 1986, and 1987

is determined as follows:

(1) BENEFIT DETERMINATION. The benefit of the employee is determined

in the same manner as under paragraph (b)(2).

(2) REQUIRED DISTRIBUTION. The total amount required to be

distributed for calendar years 1985, 1986, and 1987 is the following

percentage of the benefit (determined in accordance with subparagraph

(1)): (i) 15%, in the case of an employee with respect to whom the

first distribution calendar year is 1985, or (ii) 10%, in the case of

an employee with respect to whom the first distribution calendar

year is 1986.

(3) CREDITS. Credits for distributions may be taken in the same

manner as under paragraph (b)(4).

(d) REGULAR METHOD. Under the regular method, the sum of the minimum

distributions required for each calendar year 1985, 1986, and 1987,

calculated separately, is determined under section 401(a)(9) and this

section with appropriate adjustments. However, in determining the amount

of the minimum distribution required for calendar years 1985, 1986, and

1987, the rule in F-2 does not apply. Also, credit (with an appropriate

gross-up) may be taken toward the minimum distribution required for the

1986 or 1987 distribution calendar year for distributions in the 1985 or

1986 distribution calendar years that exceeded the minimum required

distribution for such year. If distribution is being made in the form of

an annuity and the annuity either is not a life annuity or is a life

annuity with a period certain exceeding 20 years, the amount which must be

distributed by December 31, 1987 is the aggregate of annual amounts (see F-

3(d)(2)) for each calendar year for which a distribution is required

before 1988, determined under I-2.

(e) This Q&A is illustrated by the following example:

EXAMPLE.--

(a) An employee (X), born February 1, 1914, is a participant in

a profit-sharing plan (Plan Z). X retired December 31, 1979.

Consequently his required beginning date occurred on or before

April 1, 1986. Thus X's first distribution calendar year is

1985. As of January 1, 1987, X's spouse (Y), born March 1, 1920

is X's only beneficiary under Plan Z. As of December 31, 1986,

the last valuation date under Plan Z in 1986, X's benefit is

$198,000. In 1985, X received distributions from Plan Z

totaling $5,000. In 1986 (before December 31), X received

distributions from Plan Z totaling $7,000.

(b) Under the life expectancy method, X's minimum distribution

required for 1985, 1986, and 1987 which must be distributed in

1987 by December 31 is determined as follows: (1) Benefit

under Plan Z as of the last valuation date in 1986. $198,000 (2)

Distributions in 1985. $ 5,000 (3) Distributions in 1986 before

12/31/86. $ 7,000 (4) Benefit to be used. (sum of (1), (2), and

(3)) $210,000 (5) X's attained age as of X's birthday in 1987.

73 (6) Y's attained age as of Y's birthday in 1987. 67 (7) Joint

life and last survivor of X and Y (determined under Table VI of

1.72-9 using ages in (5) and (6)). 21 (8) Benefit ((line 4)

divided by the applicable life expectancy (line 7)). $ 10,000

(9) The total amount which must be distributed for 1985, 1986,

and 1987. (2.8 X 10,000) $ 28,000 (10) Distribution in 1985 and

1986 for which credit may be taken (Sum of lines (2) and (3)).

$ 12,000 (11) Amount required to be distributed in 1987. (1 ine

9 minus line 10) $ 16,000 (c) Under the percentage method, X's

minimum distribution required for 1985, 1986, and 1987 which

must be distributed in 1987 by December 31 is determined as

follows: (1) Benefit under Plan Z as of the last valuation date

in 1986. $198,000 (2) Distributions in 1985. $ 5,000 (3)

Distributions in 1986 before 12/31/86. $ 7,000 (4) Benefit to

be used (sum of (1), (2), and (3)). $210,000 (5) Total amount

which must be distributed for 1985, 1986, and 1987 (15% of line

(4)). $ 31,500 (6) Distribution in 1985 and 1986 for which

credit may be taken (Sum of lines (2) and (3)). $ 12,000 (7)

Amount required to be distributed in 1987. (Line 5 minus line 6)

$ 19,500

I-4. Q. If (a) the employee's benefit is to be distributed in the form of

a life annuity (or a life annuity with a period certain not exceeding 20

years), (b) the employee's required beginning date is on or before April

1, 1987, and (c) the employee is alive on December 31, 1987, then as of

what date must distributions be made and how is the amount which must be

distributed by that date determined?

A.--

(a) If the three conditions set forth in the question above are satisfied,

and if the employee's required beginning date is on or before April 1,

1986, the first period for which a distribution is required is the last

payment interval (as defined in F-3) ending on or before April 1, 1986.

However, under these transition rules, no distribution is required to be

made by April 1, 1986. Instead, distribution of an amount equal to the

aggregate of the payments for all payment intervals from the last payment

interval ending on or before April 1, 1986 through the last payment

interval ending on or before December 31, 1987 must be made by December

31, 1987. Consequently, the total amount that must be distributed by

December 31, 1987 will equal the total amount that would have been

distributed by December 31, 1987, if annuity payments made in accordance

with F-3 had begun on or before April 1, 1986.

(b) If the three conditions set forth above are satisfied and the

employee's required beginning date is April 1, 1987, the first period for

which a distribution is required is the last payment interval (as defined

in F-3) ending on or before April 1, 1987. However, under these transition

rules, no distribution is required to be made by April 1, 1987. Instead,

distribution of an amount equal to the aggregate of the payments for all

payment intervals from the last payment interval ending on or before April

1, 1987 through the last payment interval ending on or before December 31,

1987 must be made by December 31, 1987. Consequently, the total amount

which must be distributed by December 31, 1987 will equal the total amount

which would have been distributed by December 31, 1987, if annuity

payments made in accordance with F-3 had begun on or before April 1, 1987.

annuity, the designated beneficiary for purposes of determining the

aggregate amount that is required to be distributed by December 31, 1987

may be determined as of any date during the 90 day period ending on the

date on which annuity payments commence but not later then the earlier of

(1) the date annuity distributions commence or (2) December 31, 1987.

(d) The provisions of this Question and Answer must be satisfied even if

the employee and spouse do not consent to any catch-up distribution

required by paragraph (a) or (b). The spouse's consent is not required

even if as a result of making distributions required by paragraph (a) or

(b), the amount payable after the death of the employee to the employee's

surviving spouse is reduced. If (1) the plan has made reasonable efforts

to obtain consent from the employee and the employee's spouse, (2) the

requirement of section 417 that plan benefits be provided in the form of a

qualified joint and survivor annuity is otherwise satisfied, and (3) the

distribution otherwise meets the requirement of section 417, then the

consent requirements of section 411(a)(11) and 417(e) are deemed to be

satisfied with respect to the distribution.

(e) The amount of the catch-up distributions described in paragraphs (a)

and (b) may be determined using either the normal form of qualified joint

and survivor annuity under the terms of the plan or a benefit option, if

any, selected by the employee as long as the distribution satisfies

section 401(a)(9). Thus, if the employee has not elected a benefit option,

the plan may determine the amount of the catch-up distribution using the

qualified joint and survivor option under the plan (as long as such form

of benefit provides for distributions that satisfy section 401(a)(9)).

(f) This Question and Answer is illustrated by the following example.

EXAMPLE. Plan Y, a defined benefit pension plan, provides that

monthly annuity payments are to be made to an unmarried employee (X)

for life with a 10 year period certain. X's required beginning date

is April 1, 1986 but X received no distributions before December 31,

1987. If annuity distributions had begun to X on April 1, 1986, he

should have been entitled under the terms of Plan Y to receive a

monthly benefit of $100. Thus if annuity distributions had begun on

April 1, 1986, by December 31, 1987, the plan would have distributed

$2100 to X, an amount equal to the aggregate of the payments for all

payment intervals from the last payment interval ending on or before

April 1, 1986 through the last payment interval ending on or before

December 31, 1987. This is the amount that the plan must distribute

to X by December 31, 1987. (Annuity payments made after December 31,

1987 will be adjusted for interest on $2100 due to the delay in

commencing distributions.)

I-5. Q. If an employee's required beginning date is on or before April 1,

1987, are there any special rules for determining the minimum distribution

for calendar years after 1987?

A.--

(a) Except as otherwise provided in paragraphs (b) and (c), if an

employee's required beginning date is on or before April 1, 1987 and if

the employee's benefit is in the form of an individual account, the amount

of the minimum distribution required for calendar years after 1987 will be

determined in a manner consistent with the use of December 31, 1987 as the

employee's required beginning date. Consequently, for example, the

employee must elect, if such election is permitted by the plan

administrator, no later than December 31, 1987 whether or not life

expectancy will be recalculated for purposes of determining the minimum

distribution required for calendar years after 1987. Further, for example,

the designated beneficiary of an employee will be determined as of

December 31, 1987 for purposes of determining the minimum distribution

required for calendar years after 1987.

(b) If an employee's required beginning date is on or before April 1, 1987

and if the employee's benefit is in the form of an individual account, the

following rule applies for determining life expectancies for purposes of

determining the minimum distribution for calendar years after 1987. If an

employee's life expectancy is being recalculated, the joint life and last

survivor expectancy of the employee and the designated beneficiary (other

than the employee's spouse) will be determined using the attained age of

the employee as of the employee's birthday in the calendar year for which

the minimum distribution is being determined and the attained age of the

designated beneficiary as of the beneficiary's birthday in 1987, adjusted

in accordance with E-8, for purposes of determining the minimum

distribution required for calendar years after 1987. If an employee's life

expectancy is not being recalculated, the joint life and last survivor

expectancy of the employee and the designated beneficiary will be

determined based on the attained ages of the employee and designated

beneficiary as of their birthdays in 1987. Such joint life and last

survivor expectancy is then reduced by one for each calendar year that has

elapsed since 1987. In such case if the designated beneficiary is not

alive on his birthday in 1987, such beneficiary will be treated as alive

on that date for purposes of determining life expectancy. If the

employee's designated beneficiary is the employee's spouse, and the life

expectancy of the employee and spouse are being recalculated, the joint

life and last survivor expectancy of the employee and spouse will be

calculated using their attained ages as of their birthdays in the calendar

year for which the minimum distribution is being determined.

and if an employee's benefit is being distributed in the form of annuity

payments, for determining the minimum distribution for calendar years

after 1987, the following rules will apply. The designated beneficiary may

be determined as of any date during the 90 day period ending on the date

on which such annuity payments commence. Life expectancy will be

determined using the attained ages of the employee and the employee's

designated beneficiary as of their birthdays in the calendar year in which

the annuity payments commence.

I-6. Q. If an employee dies before January 1, 1988, are distributions to

be made in accordance with section 401(a)(9)(B)(i) or in accordance with

section 401(a)(9)(B)(ii) or (iii) and (iv)?

A.--

(a) GENERAL RULE. If an employee dies before January 1, 1988,

distributions must be made in accordance with either the five-year rule in

section 401(a)(9)(B)(ii) or the exception to the five-year rule in section

401(a)(9)(B)(iii) and (iv), whichever is applicable. (See A-4 and C-4.) If

an employee dies before January 1, 1986, and distribution is being made

over the life or life expectancy of a designated beneficiary in accordance

with section 401(a)(9)(B)(iii) and (iv), see I-7 through I-9 for the rules

concerning (1) which calendar year is the first calendar year for which a

distribution is required (or in the case of certain life annuities which

period is the first payment interval for which a distribution is

required), (2) as of what date distributions are required to commence, and

(3) how the amount which is required to be distributed by such date is

determined.

(b) CERTAIN DISTRIBUTIONS TREATED AS HAVING BEGUN. Except as otherwise

provided in paragraph (c), if an employee's required beginning date is (or

would have been) on or before April 1, 1987 and such employee dies in

calendar year 1985, 1986 or 1987, but on or after the first day of the

employee's first distribution calendar year, the plan administrator may,

under these transition rules, treat distributions as having begun in

accordance with section 401(a)(9)(A)(ii) before the employee died for

purposes of section 401(a)(9)(B)(i). The plan administrator may make such

determination on an individual by individual basis. Distributions may be

treated as having begun for purposes of section 401(a)(9)(B)(i) even

though payments were not actually made before the employee died. If, under

this transition rule, distributions are treated as having begun before the

employee died, distribution of the employee's benefit for calendar years

1985 (if applicable), 1986, 1987, and subsequent calendar years will be

made to the employee's beneficiaries over a period described in section

401(a)(9)(A)(ii) pursuant to section 401(a)(9)(B)(i) rather than in

accordance with section 401(a)(9)(B)(ii) or (iii) and (iv). (See C-4.) If

distributions are thus treated as having begun, the amount of any minimum

distribution required for calendar years 1985, 1986 or 1987 will be

determined in accordance with I-2 through I-5 treating the employee as

alive on December 31, 1987. If such amount was not paid to the employee

before the employee's death, it must be paid to the beneficiaries of the

employee on or before December 31, 1987. Further, in such case, the

designated beneficiary of the employee will be determined as of any date

in 1987. The applicable life expectancies are determined using birthdays

in 1987, and by treating the employee and designated beneficiary as alive.

Except as otherwise provided in these transition rules, the employee's

life expectancy will not be recalculated. However, if the employee's

spouse is a beneficiary, such spouse's life expectancy will be

recalculated unless either (1) the plan administrator establishes a policy

that spouses' life expectancies are not recalculated or (2) the spouse

elects not to have life expectancy recalculated.

in I-9(c) plan distributions must satisfy the survivor requirements of

sections 401(a)(11) and 417 notwithstanding the rules in paragraph (b).

These requirements may mandate a particular method of distribution to a

surviving spouse or require spousal consent. Further, the rules in

paragraph (b) allowing a plan administrator to treat distributions as

having begun do not apply for purposes of determining under section

401(a)(11) and 417 whether distribution must be in the form of a qualified

preretirement survivor annuity or a qualified joint and survivor annuity.

(d) EXAMPLE. This I-6 is illustrated by the following example:

EXAMPLE.--

(a) An employee (X), born May 2, 1915, is a participant in Plan

Y (a profit-sharing plan). X retired December 31, 1985. X died

March 1, 1986. As of X's date of death, X's sole beneficiary

under Plan Y was X's spouse. The plan administrator of Plan Y

has established no policy concerning recalculation of life

expectancy or of permitting elections of such recalculation.

(Thus, any default provisions in this section of the

regulations apply.)

(b) If X had survived, X's required beginning date would have

been April 1, 1986 and X's first distribution calendar year

would have been 1985. Because X died on or after January 1,

1985 and before December 31, 1987, the plan may distribute

either (1) to X's spouse in accordance with the exception to

the five year rule in section 401(a)(9)(B)(iii) and (B) or (2)

treat distributions as having begun to X before death pursuant

to paragraph (b) of this I-6 (c) If Plan Y distributes to X's

spouse in accordance with the exception to the five-year rule

in section 401(a)(9)(B)(iii) and (iv), the first distribution

calendar year is 1987 and distributions must commence by

December 31, 1987. If instead Plan Y treats distributions as

having begun, X's first distribution calendar year is 1985.

Under these transition rules, minimum distributions for 1985,

1986, and 1987 would then be required to be made by December

31, 1987. In accordance with paragraph (b) of this I-6, X's

life expectancy will not be recalculated but, in accordance

with E-7(a), X's spouse's life expectancy will be recalculated.

I-7. Q. If an employee died prior to January 1, 1986 and distributions are

being made over the life expectancy of a designated beneficiary in

accordance with section 401(a)(9)(B)(iii) and (iv), which is the first

calendar year for which a distribution is required and when must

distribution commence?

A. Except as otherwise provided in I-9 (special rule for certain life

annuities), if an employee died prior to January 1, 1986 and

distributions are being made over the life expectancy of a designated

beneficiary in accordance with section 401(a)(9)(B)(iii) and (iv), the

first distribution calendar year for which a minimum distribution is

required is the later of (1) the calendar year which contains the

required commencement date determined under C-3(a) or (b), whichever is

applicable, or (2) calendar year 1985. However, under these transitional

rules, if the first distribution calendar year is 1985, the minimum

distribution for 1985 is not required to be made by December 31, 1985.

Similarly, under these transition rules, if the first (or second)

distribution calendar year is 1986, the minimum distribution for 1986 is

not required to be made by December 31, 1986. Instead, in such case, the

minimum distribution required for 1985 (if applicable), 1986, and 1987 is

required to be made by December 31, 1987.

I-8. Q. If (a) distributions after the death of an employee are being made

over the life expectancy of a designated beneficiary in accordance with

section 401(a)(9)(B)(iii) and (iv), and (b) the first distribution

calendar year is 1985 or 1986 (determined under I-3), then how is the

amount of the minimum distribution determined for calendar years 1985,

1986, and 1987?

A.--

(a) IN GENERAL.--

(1) If the two conditions set forth in the Question are satisfied,

the amount of the minimum distribution for calendar years 1985, 1986,

and 1987 is to be determined under one of the three methods described

in paragraphs (b), (c), and (d). The plan administrator is to

determine which method, including the credit rules under paragraph

(b)(4) and (c)(3), is to be used. The same method used under this I-8

and I-2 must be used with respect to all such employees.

(2) See I-9 for a special rule for distributions in the term of a

life annuity.

(b) LIFE EXPECTANCY METHOD. Under the life expectancy method, the total

amount of the minimum distribution required for calendar years 1985, 1986,

and 1987 is determined as follows:

(1) DESIGNATED BENEFICIARY AND LIFE EXPECTANCY. The designated

beneficiary of the employee will be determined as of any date in

1987. The applicable life expectancy will be the designated

beneficiary's life expectancy using attained age as of his birthday

in 1987. In the case of a beneficiary who is not alive on his

birthday in 1987, such beneficiary will be treated as being alive on

his birthday in 1987 for purposes of determining life expectancy

under this transitional rule.

(2) BENEFIT DETERMINATION. The benefit of the employee is determined

by using the account balance as of the last valuation date under the

plan in 1986, adjusted in accordance with F-5 with the following

modifications. First, the benefit adjustment for distributions after

the valuation date under F-5(c) is not made. Second, the benefit is

increased by any distribution made in 1985 or 1986 before the

valuation date described in subparagraph (2) for which credit is

being taken under subparagraph (4).

(3) REQUIRED DISTRIBUTION. The total amount which must be distributed

for calendar years 1985, 1986, and 1987 using the life expectancy

method will be determined by dividing the benefit determined under

subparagraph (2) by the applicable life expectancy determined under

subparagraph (1) and multiplying the quotient by: (i) 2.8, in the

case of an employee with respect to whom the first distribution

calendar year is 1985, or (ii) 1.9, in the case of an employee with

respect whom the first distribution calendar year is 1986.

(4) CREDIT FOR DISTRIBUTIONS. In determining whether the total amount

which must be distributed for calendar years 1985, 1986, and 1987 has

been distributed, credit may be taken (as determined by the plan

administrator) for any amount distributed in a distribution calendar

year of the employee (1985 through 1987). Consequently, to determine

the amount which is required to be distributed in calendar year 1987,

the plan administrator may reduce the total amount which must be

distributed in 1987 for calendar years 1985, 1986, and 1987

determined under subparagraph (3)) by the amounts distributed in:

(i) 1985 and 1986, in the case of an employee with respect to

whom the first distribution calendar year is 1985, or

(ii) 1986, in the case of an employee with respect to whom the

first distribution calendar year is 1986. However, in the case

of distributions before the last valuation date in 1986, credit

may only be taken for amounts which were used to increase the

benefit pursuant to subparagraph (2).

the minimum distribution required for calendar years 1985, 1986, and 1987

is determined as follows:

(1) BENEFIT DETERMINATION. The benefit of the employee is determined

in the same manner as under paragraph (b)(2).

(2) REQUIRED DISTRIBUTION. The total amount required to be

distributed for calendar years 1985, 1986, and 1987 is the following

percentage of the benefit (determined in accordance with subparagraph

(1)): (i) 15%, in the case of an employee with respect to whom the

first distribution calendar year is 1985, or (ii) 10%, in the case of

an employee with respect to whom the first distribution calendar

year is 1986.

(3) CREDITS. Credits for distributions may be taken in the same manner as

under paragraph (b)(4).

(d) REGULAR METHOD. Under the regular method, the sum of the minimum

distributions required for each calendar year 1985, 1986, and 1987,

calculated separately, is determined under section 401(a)(9) and this

section with appropriate adjustments. However, the rule in F-2 does not

apply. Also, credit (with an appropriate gross-up) may be taken toward the

minimum required distribution for the 1986 or 1987 distribution calendar

year for distributions in 1985 or 1986 distribution calendar years that

exceeded the minimum required distribution for such year. If distribution

is being made in the form of an annuity and the annuity is not a life

annuity (or is a life annuity with a period certain exceeding 20 years),

the amount which must be distributed by December 31, 1987 is the aggregate

of annual amounts (see F-3(d)(2)) for each calendar year for which a

distribution is required before 1988, determined under I-2.

I-9. Q. If (a) the employee died prior to January 1, 1986, (b)

distribution is to be made in accordance with the exception to the five-

year rule in section 401(a)(9)(B)(iii) and (iv), and (c) the employees

benefit is to be distributed in the form of a life annuity (or a life

annuity with a period certain not exceeding 20 years), then as of what

date must distributions be made, and how is the amount which must be

distributed by that date determined?

A.--

(a) If the three conditions set forth in the Question are satisfied, the

first period for which a distribution is required is the last payment

interval (as defined in F-5) ending on or before the later of (1) the

required commencement date determined under C-3(a) or (b), whichever is

applicable, and (2) December 31, 1985. However, if such date is before

December 31, 1987, under these transition rules, no distribution is

required to be made on such date. Instead, distribution of an amount equal

to the aggregate of the payments for all payment intervals from the last

payment interval ending on or before that date through the last payment

interval ending on or before December 31, 1987 must be made by December

31, 1987. Consequently, the total amount which must be distributed by

December 31, 1987 will equal the total amount that which would have been

distributed by December 31, 1987 if annuity payments made in accordance

with C-3 had begun on or before the later of (1) the required commencement

date determined under C-3(a) or (b), whichever is applicable, and (2)

December 31, 1985.

(b) The designated beneficiary may be determined as of any date during the

90 day period ending on the earlier of (1) the date annuity distributions

commence or (2) December 31, 1987.

the surviving spouse does not consent to the any catch-up distribution

required under paragraph (a), and even if, as a result of such catch-up

distribution, the amount payable after December 31, 1987 to the employee's

surviving spouse under a qualified preretirement survivor annuity is

reduced. In such case, if (1) the plan has made reasonable efforts to

obtain consent from the employee's surviving spouse, (2) the requirement

of section 417 that plan benefits be provided in the form of a qualified

preretirement annuity is otherwise satisfied, and (3) the distribution

otherwise meets the requirement of section 417, then the consent

requirements of section 417 are deemed to be satisfied with respect to the

distribution.

I-10. Q. If an employee died prior to January 1, 1986 and distributions

are being made over the life expectancy of a designated beneficiary in

accordance with section 401(a)(9)(B)(iii) and (iv), as of what date is the

designated beneficiary determined, and what age is used to determine the

designated beneficiary's life expectancy, for purposes of determining the

minimum distribution for calendar years after 1987?

A.--

(a) If an employee died prior to January 1, 1986 and distributions are

being made over the life expectancy of a designated beneficiary in

accordance with section 401(a)(9)(B)(iii) and (iv), the designated

beneficiary will be determined as of any date in 1987 for purposes of

determining the minimum distribution for calendar years after 1987. The

life expectancy of the designated beneficiary (other than the employee's

surviving spouse whose life expectancy is being recalculated) will be

determined using the attained age of the designated beneficiary as of such

beneficiary's birthday in calendar year 1987, reduced by one for each

calendar year which has elapsed after 1987. In such case if the designated

beneficiary is not alive on his birthday in 1987, such beneficiary will be

treated as being alive on that date for purposes of determining life

expectancy. If the employee's surviving spouse is a designated beneficiary

and such spouse's life expectancy is being recalculated, the life

expectancy of spouse will be calculated using the attained age of the

spouse as of such spouse's birthday in the calendar year for which the

minimum distribution is being determined.

(b) If an employee died prior to January 1, 1986 and distributions are

being made over the life expectancy of a designated beneficiary in

accordance with section 401(a)(9)(B)(iii) and (iv) in the form of annuity

payments, the designated beneficiary will be determined as of any date

during the 90 day period ending on the date such annuity payments

commence. The designated beneficiary's life expectancy will be determined

using the attained age of the designated beneficiary as of such

beneficiary's birthday in the calendar year in which the annuity payments

commence.

I-11. Q. In the case of the surviving spouse of an employee for whom the

first calendar year for which a distribution is required to be made is

1985 or 1986, when must the employee's spouse elect whether or not life

expectancy will be recalculated?

A. If an employee for whom the first calendar year for which a

distribution is required to be made is calendar year 1985 or 1986, any

election, if permitted by the plan administrator, concerning

recalculation of life expectancy must be made by December 31, 1987.

I-12. Q. When must the election described in C-4 (concerning whether

distribution will be made in accordance with the five-year rule in section

401(a)(9)(B)(ii) or the exception to the five-year rule in section

401(a)(9)(B)(iii) and (iv)) be made by a beneficiary otherwise required to

make such election on or before December 31, 1985 or December 31, 1986?

A. The election described in C-4 (concerning whether distribution will be

made in accordance with the five-year rule in section 401(a)(9)(B)(ii) or

the exception to the five-year rule in section 401(a)(9)(B)(iii) and

(iv)), if otherwise required to have been made on or before December 31,

1985 or December 31, 1986, must, if permitted by the plan administrator,

be made by December 31, 1987.

I-13. Q. If an employee died prior to January 1, 1985 and distribution is

to be made in accordance with the five-year rule contained in section

401(a)(9)(B)(ii), as of what date must the employee's entire interest be

distributed?

A. If an employee died prior to January 1, 1985 and distribution is to be

made in accordance with the five-year rule contained in section

401(a)(9)(B)(ii), the employee's entire interest must be distributed as

of the later of: (a) December 31 of the calendar year which contains the

fifth anniversary of the employee's death or (b) December 31, 1987.

I-14. Q. If any portion of the minimum distribution required for calendar

years 1985, 1986, or 1987 (which is required to be distributed by December

31, 1987) is distributed by a plan and rolled over to another plan

(receiving plan) before such date, how does receipt of such rollover

amount affect the qualification under section 401(a) of the plan accepting

it?

A. If any portion of the minimum distribution required for calendar years

1985, 1986, or 1987 which is required to be distributed by December 31,

1987 is distributed by a plan and rolled over to another plan (receiving

plan) before such date, under these transitional rules, the qualification

under section 401(a) of the receiving plan is not affected by the receipt

of such amount. However, see G-1B for the tax consequences to the

distributee who rolls over the amount (including, if the amount is rolled

over to an individual retirement plan, the rule for avoiding certain tax

consequences). Certain tax consequences may be avoided by the distributee

who rolls over to another qualified plan in either of two ways: (a) the

receiving plan may distribute by December 31, 1987 that portion of the

amount rolled over which is the minimum distribution from the distributing

plan for calendar years 1985, 1986 or 1987 or (b) the distributing plan

may distribute by December 31, 1987 an additional amount equal to that

portion of the amount rolled over which is the minimum distribution from

such plan for calendar years 1985, 1986 or 1987.

I-15. Q. In the case of a transfer in 1985, 1986, or 1987 of all or a

portion of an employee's benefit from one plan (transferor plan) to

another plan (transferee plan), is the amount transferred treated as an

amount distributed for purposes of section 401(a)(9)?

A.--

(a) Except as otherwise provided in paragraph (b), in the case of a

transfer in 1985, 1986, or 1987 but before [60 days after this notice is

published] of all or a portion of an employee's benefit from one plan

(transferor plan) to another plan (transferee plan) before the minimum

amount required to be distributed by the transferor plan for such calendar

year has been distributed, the transferor plan may treat the amount

transferred as a distribution for purposes of section 401(a)(9).

(b) If all or a portion of an employee's benefit is transferred from one

plan (transferor plan) to another plan (transferee plan) in 1985, 1986, or

1987 before [60 days after this notice is published] and before the

minimum amount required to be distributed by the transferor plan for such

calendar year has been distributed and the employee is a 5-percent owner

(as defined in B-2) with respect to the employer maintaining either the

transferor plan or the transferee plan, the transferee plan must

distribute by December 31, 1987 any portion of the minimum distribution

required to be distributed with respect to the portion of the benefit

transferred but not distributed by the transferor plan for calendar years

1985, 1986, or 1987.

notice is published], the rules in G-3 apply.

I-16. Q. What are the distribution requirements applicable to qualified

plans that cover self-employed individuals described in section 401(c)(1)

(HR 10 plans) for 1984?

A. For 1984, HR 10 plans are subject to the distribution requirements of

section 401(a)(9) as in effect on September 2, 1982 (prior to such

section's replacement by section 242(a) of TEFRA). (The after-death

distribution rules in section 401(d)(7) applicable to owner-employees in

HR 10 plans were repealed by section 237 of TEFRA and were not reinstated

for 1984 by TRA of 1984.) An HR 10 plan that does not satisfy section

401(a)(9) (as in effect on September 2, 1982) in 1984 will not be

considered to fail to qualify under section 401(a) or 403(a) solely for

that reason if, in operation, the aggregate amount distributed by

December 31, 1987 equals or exceeds the amount required to satisfy

section 401(a)(9) prior to its amendment by TEFRA plus the amount

required to satisfy section 401(a)(9) after its amendment by TRA of 1984

for calendar years 1985, 1986, and 1987. Thus, plan amendments to reflect

the law for 1984 are not required in order to satisfy the old HR 10

requirement.

I-17. Q. In the case of a plan covering self-employed individuals to which

the minimum distribution rules in section 1.401-11(e) apply, if the

aggregate amounts distributed with respect to an employee in calendar

years prior to 1985 for which minimum distributions were required pursuant

to section 1.401-11(e) exceeded the aggregate amount required for such

calendar years, may credit be given for such amount for purposes of

satisfying the minimum distribution requirement for calendar years 1985

through 1987?

A. Yes. In the case of a plan covering self-employed individuals to which

the minimum distribution rules in section 1.401-11(e) apply, if the

aggregate amounts distributed with respect to an employee in calendar

years prior to 1985 for which minimum distributions were required

pursuant to section 1.401-11(e) exceed the aggregate amount required,

credit may be taken for the difference between the aggregate amount

distributed in calendar years before 1985 and the aggregate amount

required to be distributed for such calendar years. Such excess amount

will be treated as an amount distributed in calendar year 1985 for

purposes of determining the amount which is required to be distributed by

December 31, 1987 under I-3.

J. ELECTIONS UNDER SECTION 242(b)(2) OF TEFRA.

J-1. Q. Is a plan disqualified merely because it pays benefits under a

designation made before January 1, 1984, in accordance with section

242(b)(2) of TEFRA?

A. No. Even though the distribution requirements added by TEFRA were

retroactively repealed by TRA of 1984, the transitional election rule in

section 242(b) was preserved. Notice 83-23, 1983-2 CB 418, provides

guidance for distributions permitted by this transitional rule.

Satisfaction of the spousal consent requirements of section 417(a) and

(e) (added by the Retirement Equity Act of 1984) will not be considered a

revocation of the pre-1984 designation under that Notice. However,

sections 401(a)(11) and 417 must be satisfied with respect to any

distribution subject to such section. The election provided in section

242(b) is hereafter referred to as a section 242(b)(2) election.

J-2. Q. In the case in which an amount is transferred from one plan

(transferor plan) to another plan (transferee plan), may the transferee

plan distribute the amount transferred in accordance with a section

242(b)(2) election made under either the transferor plan or under the

transferee plan?

A.--

(a) In the case in which an amount is transferred from one plan to another

plan, the amount transferred may be distributed in accordance with a

section 242(b)(2) election made under the transferor plan if the employee

did not elect to have the amount transferred and if the amount transferred

is separately accounted for by the transferee plan. However, only the

benefit attributable to the amount transferred, plus earnings thereon, may

be distributed in accordance with the section 242(b)(2) election made

under the transferor plan. If the employee elected to have the amount

transferred, the transfer will be treated as a distribution and rollover

of the amount transferred for purposes of this J-2 and J-3.

(b) In the case in which an amount is transferred from one plan to another

plan, the amount transferred may not be distributed in accordance with a

section 242(b)(2) election made under the transferee plan. If a section

242(b)(2) election was made under the transferee plan, the amount

transferred must be separately accounted for. If the amount transferred is

not separately accounted for under the transferee plan, the section

242(b)(2) election under the transferee plan is revoked and section

401(a)(9) will apply to subsequent distributions by the transferee plan.

be treated as a transfer for purposes of the section 242(b)(2) election.

J-3. Q. If an amount is distributed by one plan (distributing plan) and

rolled over into another plan (receiving plan), may the receiving plan

distribute the amount rolled over in accordance with a section 242(b)(2)

election made under either the distributing plan or the receiving plan?

A. No. If an amount is distributed by one plan and rolled over into

another plan, the receiving plan must distribute the amount rolled over

in accordance with section 401(a)(9) whether or not the employee made a

section 242(b)(2) election under the distributing plan. Further, if the

amount rolled over was not distributed in accordance with the election,

the election under the distributing plan is revoked and section 401(a)(9)

will apply to all subsequent distributions by the distributing plan.

Finally, if the employee made a section 242(b)(2) election under the

receiving plan and such election is still in effect, the amount rolled

over must be separately accounted for under the receiving plan and

distributed in accordance with section 401(a)(9). If amounts rolled over

are not separately accounted for, any section 242(b)(2) election under

the receiving plan is revoked and section 401(a)(9) will apply to

subsequent distributions by the receiving plan.

J-4. Q. May a section 242(b)(2) election be revoked after the date by

which distributions are required to commence in order to satisfy section

401(a)(9) and this section of the regulations?

A. Yes. A section 242(b)(2) election may be revoked after the date by

which distributions are required to commence in order to satisfy section

401(a)(9) and this section of the regulations. However, if the section

242(b)(2) election is revoked after the date by which distributions are

required to commence in order to satisfy section 401(a)(9) and this

section of the regulations and the total amount of the distributions

which would have been required to be made prior to the date of the

revocation in order to satisfy section 401(a)(9), but for the section

242(b)(2) election, have not been made, the trust must distribute by the

end of the calendar year following the calendar year in which the

revocation occurs the total amount not yet distributed which was required

to have been distributed to satisfy the requirements of section 401(a)(9)

and continue distributions in accordance with such requirements. Further,

an additional amount may be required to be distributed to satisfy the

minimum distribution incidental death benefit requirement. See section

1.401(a)(9)-2.

J-5. Q. May the distribution of amounts otherwise required to be

distributed in 1985, 1986, or 1987 before December 31, 1987, pursuant to a

section 242(b)(2) election be deferred until December 31, 1987 under the

transition rule in I-1 or through J-15?

A. The transition rules in I-1 through I-15 do not apply to distributions

to be made pursuant to a section 242(b)(2) election. Failure to make any

distribution of an amount specified at the time specified under the

method of distribution provided in a section 242(b)(2) election will be

treated as a change in the election and thus a revocation of the

election. In the event of such a revocation before December 31, 1987, the

transition rules in I-1 through I-15 will apply to any distributions

otherwise required to be made before December 31, 1987. Accordingly, in

the event of such a revocation before December 31, 1987, any distribution

otherwise required under section 401(a)(9) and this section of the

regulations to be made before December 31, 1987 may be delayed until that

date.

[52 F.R. 28070, July 27, 1987]