Government Thrift Plan Help
Does anyone have access to summary plan desc. for US Gov. employee’s thrift plan. I have a client hitting 70.5. The Thrift plan people are mandating RMD by March. I assume its administrative. Anyone have any info?
Does anyone have access to summary plan desc. for US Gov. employee’s thrift plan. I have a client hitting 70.5. The Thrift plan people are mandating RMD by March. I assume its administrative. Anyone have any info?
Permalink Submitted by Alan Spross on Wed, 2012-01-18 23:27
The TSP should have no unique RMD requirements.
The client’s required beginning date is 4/1 of the year following the year he reaches 70.5, assuming he is no longer working for the govt. If he reaches 70.5 in 2012, he RBD is 4/1/2013, but if he wants to avoid having two RMDs taxable in 2013 he needs to take the 2012 RMD before 12/31/2012.
The TSP is probably indicating March since there is no time to process and distribute the RMD on one day (4/1). So effectively they probably mean by late March, not by March 1. If the client reached 70.5 last year, then the 2011 RMD needs to come out no later than 4/1/2012.
And if the client wants to roll the TSP over to an IRA, the TSP RMD must be distributed and cannot be included in the rollover.
An employer plan CAN have RMDs rules that are more restrictive than the IRS, but not less restrictive. But I have never heard of the TSP having a more restrictive provision.
Permalink Submitted by William Harris on Thu, 2012-01-19 22:08
How do you determine actual 70.5 date? If birthdate is 6/27/41. Is it actual or is it 6/27/41 plus 180 days?
Permalink Submitted by Alan Spross on Thu, 2012-01-19 22:22
It is 12/27/2011.
Here is a copy of the applicable IRS Reg 1.401(a)(9)-2 – Q 3:
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Q–3. When does an employee attain age 70 1/2?
A–3. An employee attains age 70 1/2 as of the date six calendar months after the 70th anniversary of the employee’s birth. For example, if an employee’s date of birth was June 30, 1933, the 70th anniversary of such employee’s birth is June 30, 2003. Such employee attains age 70 1/2 on December 30, 2003. Consequently, if the employee is a 5-percent owner or retired, such employee’s required beginning date is April 1, 2004. However, if the employee’s date of birth was July 1, 1933, the 70th anniversary of such employee’s birth would be July 1, 2003. Such employee would then attain age 70 1/2 on January 1, 2004 and such employee’s required beginning date would be April 1, 2005.
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Note that attaining 59.5 is not specified in such a Reg, but it is generally assumed to follow the same method as posted above.