457(b) Distributions

Submitted by Florina Chuy on Mon, 2020-03-02 14:51

Two years ago I filled out a form with the following payment options from a non-government 457(b) deferred compensation plan: 1. Lump Sum 2. Lifetime Annuity 3. Fixed-period annuity/Fixed period Installment 4. Required minimum distribution. I chose Required minimum distribution to start payment in December 2020 (I retired in 2018, so I wanted to defer payments till after I need to withdraw per IRS rules). At that time, RMDs were to begin at 70½. Now that RMDs don’t start till age 72, I have asked my financial institution that I wanted to fill out another form with start date in 2022. They told me that my previous employer does not allow a second deferral, even if one does not have to start RMDs till age 72. Does this make sense?



Submitted by Alan - IRA critic on Mon, 2020-03-02 18:15

  • If this is a plan requirement, then the plan defines RMDs differently from the IRS. This can happen with plans that require all employees to start RMDs at 72 even for employees that are not 5% owners. 

Submitted by Florina Chuy on Wed, 2020-03-04 06:38

I do not reach 70.5 till November 2020, therefore technically RMDs are not required by the IRS till 2022, but it looks like that as far as the employer is concerned, they are not changing their interpretation of RMD to reflect the change in the SECURE Act, which pushes the RMD till age 72.

Submitted by Florina Chuy on Wed, 2020-03-04 06:39

I do not reach 70.5 till November 2020, therefore technically RMDs are not required by the IRS till 2022, but it looks like that as far as the employer is concerned, they are not changing their interpretation of RMD to reflect the change in the SECURE Act, which pushes the RMD till age 72.

Submitted by Alan - IRA critic on Wed, 2020-03-04 14:56

Hard to know why the plan is taking this position, and originally I overlooked that this is a NON govt plan, so you cannot even roll over the forced distribution. I am editing the prior post to eliminate reference to a rollover. You might check again with a more senior plan rep about their position. Perhaps they need time to make a systems change or the first answer might be reconsidered.

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