That was the key takeaway from the final mandate released by the U.S. Treasury Department and Internal Revenue Service (IRS) that affects all qualified federal, state, or local government plans including 403(b) contracts that are part of a governmental plan, individual retirement accounts described in 408, and 457(b) eligible deferred compensation plans.
The regulations generally require plans to start distributing each participant’s plan assets by April 1 of the calendar year after the year in which the plan participant turns 70 1/2 or by April 1 of the calendar year following the year in which the participant retires, whichever date is later.
If the entire interest of the participant is not distributed by the required beginning date, then section 401(a)(9)(A) provides that the entire interest of the participant must be distributed beginning not later than the required beginning date, in accordance with regulations, over the life of the participant or lives of the participant and a designated beneficiary (or over a period not extending beyond the life expectancy of the participant or the life expectancy of the participant and a designated beneficiary).
The Pension Protection Act directed the Treasury Secretary to distribute regulations giving government plans the ability to qualify under the reasonable and good faith interpretation standard of 401(a)(9).
The final rules are effective September 8. The rules will apply to all plan years to which Section 401(a)(9) applies, IRS said.
The final rule is available here .
« Boehner Backs Savings Initiatives