4080 / What minimum distributions requirements apply under Section 401(a)(9) during the life of a tax sheltered annuity participant if distributions are made as annuity payments?
Regulations under Section 401(a)(9) govern annuity distributions from Section 403(b) plans.1 Under those regulations, annuity distributions must be periodic payments made at least annually, for a life or lives, or over a period certain not longer than a life expectancy or a joint and survivor life expectancy of the participant or the participant and a beneficiary, as set forth in the IRC’s provisions for lifetime and after death distributions ( Q 3896).2 The annuity also may be a life annuity with a period certain, as long as the life or lives and period certain each meet the foregoing requirements.3 The distribution of an annuity contract is not a distribution for purposes of meeting the required minimum distribution requirements of IRC
Section 401(a)(9).4
Commencement of Distributions
Distributions from an annuity contract must begin on or before the participant’s required beginning date. The first payment must be the payment that is required for one payment interval. Regulations state that the second payment need not be made until the end of the next payment interval, even if the interval ends in the next calendar year. Examples of payment intervals include monthly, bimonthly, semi-annually, and annually.5
All benefit accruals as of the last day of the first distribution calendar year must be included in the calculation of the amount of the life annuity payments for payment intervals ending on or after the participant’s required beginning date.6
Exceptions to Nonincreasing Annuity Requirement