Sec. 1.403(b)-6 Timing of distributions and benefits.

(i) General rule. Except as provided in § 1.403(b)-4(f) (relating to correction of excess deferrals) or § 1.403(b)-10(a) (relating to plan termination), distributions of amounts attributable to section 403(b) elective deferrals may not be paid to a participant earlier than the earliest of the date on which the participant has a severance from employment, dies, has a hardship, becomes disabled (within the meaning of section 72(m)(7)), or attains age 59 1/2.

(ii) Special rule for pre-1989 section 403(b) elective deferrals. For special rules relating to amounts held as of the close of the taxable year beginning before January 1, 1989 (which does not apply to earnings thereon), see section 1123(e)(3) of the Tax Reform Act of 1986 (100 Stat. 2085, 2475) Public Law 99-514, and section 1011A(c)(11) of the Technical and Miscellaneous Revenue Act of 1988 (102 Stat. 3342, 3476) Public Law 100-647.

(i) Any date permitted under paragraph (d)(1) of this section; and

(ii) Any date permitted under paragraph (b) or (c) of this section with respect to contributions that are not section 403(b) elective deferrals (whichever applies to the contributions that are not section 403(b) elective deferrals).

(i) Required beginning date. The required beginning date for purposes of section 403(b)(10) is determined in accordance with §1.401(a)(9)-2(b) (rather than §1.408-8(b)(1)).

(ii) Amounts not taken into account. The amounts not taken into account in determining whether the minimum distribution requirement of section 401(a)(9) has been satisfied for a calendar year are the amounts described in §1.402(c)-2(c)(3) (rather than the amounts described in §1.408-8(g)(2)).

(iii) Designated Roth account. The rules of §1.401(a)(9)-3(a)(2) (which provides that if an employee’s entire interest under a defined contribution plan is in a designated Roth account, then no distributions are required during the employee’s lifetime and, upon death, the employee is treated as having died before the required beginning date), §1.401(a)(9)-5(b)(3) (which excludes amounts held in a designated Roth account from the employee’s account balance), and §1.401(a)(9)-5(g)(2)(iii) (regarding distributions from designated Roth accounts) apply to a designated Roth account in a section 403(b) contract (rather than the rules of §1.408-8(b)(1)(ii) that apply to a Roth IRA).

(iv) Qualifying longevity annuity contracts. The rules in §1.401(a)(9)-6(q)(2)(i) (relating to the limitation on premiums for a qualifying longevity annuity contract (QLAC), as defined in §1.401(a)(9)-6(q)(1)) and §1.401(a)(9)-6(q)(4)(i)(A) (relating to reliance on representations with respect to a QLAC) apply to the purchase of a QLAC under a section 403(b) plan (rather than the rules in §1.408-8(h)(2) and (3)).

(i) Non-applicability of section 401(a)(9) to pre-’87 account balance. The minimum distribution requirements of section 401(a)(9) do not apply to the undistributed portion of the account balance under a section 403(b) contract valued as of December 31, 1986, exclusive of subsequent earnings (pre-'87 account balance). The minimum distribution requirements of section 401(a)(9) apply to all benefits under any section 403(b) contract accruing after December 31, 1986 (post-'86 account balance), including earnings after December 31, 1986. Consequently, the post-'86 account balance includes earnings after December 31, 1986, on contributions made before January 1, 1987, in addition to the contributions made after December 31, 1986, and earnings thereon.

(ii) Recordkeeping required. The issuer or custodian of the section 403(b) contract must keep records that enable it to identify the pre-'87 account balance and subsequent changes as set forth in paragraph (e)(6)(iii) of this section and provide that information upon request to the relevant employee or beneficiaries with respect to the contract. If the issuer or custodian does not keep those records, the entire account balance is treated as subject to section 401(a)(9).

(iii) Applicability of section 401(a)(9) to post-’86 account balance. In applying the minimum distribution requirements of section 401(a)(9), only the post-'86 account balance is used to calculate the required minimum distribution for a calendar year. The amount of any distribution from a contract is treated as being paid from the post-'86 account balance to the extent the distribution is required to satisfy the minimum distribution requirement with respect to that contract for a calendar year. Any amount distributed in a calendar year from a contract in excess of the required minimum distribution for a calendar year with respect to that contract is treated as paid from the pre-'87 account balance, if any, of that contract.

(iv) Rollover of amounts from pre-’87 account balance. If an amount is distributed from the pre-'87 account balance and rolled over to another section 403(b) contract, the amount is treated as part of the post-'86 account balance in that second contract. However, if the pre-'87 account balance under a section 403(b) contract is directly transferred to another section 403(b) contract (as permitted under §1.403(b)-10(b)), the amount transferred retains its character as a pre-'87 account balance, provided the issuer of the transferee contract satisfies the recordkeeping requirements of paragraph (e)(6)(ii) of this section.

(v) Relevance of distinction between pre-’87 and post-’86 account balance for purposes of section 72. The distinction between the pre-'87 account balance and the post-'86 account balance provided for under this paragraph (e)(6) has no relevance for purposes of determining the portion of a distribution that is includible in income under section 72.

(vi) Pre-’87 account balance distributions must satisfy incidental benefit requirement. The pre-'87 account balance must be distributed in accordance with the incidental benefit requirement of §1.401-1(b)(1)(i). Distributions attributable to the pre-'87 account balance are treated as satisfying this requirement if all distributions from the section 403(b) contract (including distributions attributable to the post-'86 account balance) satisfy the requirements of §1.401-1(b)(1)(i) without regard to this section, and distributions attributable to the post-'86 account balance satisfy the rules of this paragraph (e) (without regard to this paragraph (e)(6)). Distributions attributable to the pre-'87 account balance are treated as satisfying the incidental benefit requirement if all distributions from the section 403(b) contract (including distributions attributable to both the pre-'87 account balance and the post-'86 account balance) satisfy the rules of this paragraph (e) (without regard to this paragraph (e)(6)).