How Would A Change in RMD Rules for 403(b) Plans Apply to Participants With Multiple Plans?

“I read your 2015 Ask the Experts column that cautioned against forcing required minimum distributions in 403(b) plans, partially because a plan participant could satisfy his or her RMD requirement for one 403(b) plan by taking an RMD from a different 403(b) plan. I’m hearing, however, that this may change. Is that true, and, if it is, would that change your response on forced RMDs at all?”

Kimberly Boberg, Taylor Costanzo, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

It is true. The IRS is “considering additional changes to the required minimum distribution rules for section 403(b) plans so that they more closely follow the required minimum distribution rules for qualified plans.” See Proposed Required Minimum Distribution Regulations; 87 Fed. Reg. 10504 (Feb. 24, 2022). While only the subject of a request for comments at this point, if the IRS moves forward with this change, an RMD would have to be taken from each 403(b) contract, rather than a participant being able to request his total RMD amount from one 403(b) account. To date, a decision has not been announced on the change, such that the rule has yet to be drafted and incorporated (never mind finalized), so the status quo remains for now.

If the proposed change is adopted, 403(b) plans would be required to provide an RMD from each 403(b) contract, such that the employer would be legally obligated to require a distribution from their plan.

NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice. 

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