For a non-calendar year PS plan with annual valuations on say 7/31, if the RMD is paid after 7/31, we generally subtract it from the 7/31 balance before calculating the next year's RMD amount.

Consider a regular calendar year plan and a participant reaches age 70 1/2. Say participant is paid next yr prior to 4/1. For RMD calculation in next yr, do you subtract that first RMD paid after valuation date, similar to example above?

Example:

Balance 12/31/08 = $100,000
2008 RMD paid 2/1/09 (based on 12/31/07 balance) = $3,000

2009 RMD calculated as:

Option A: $100,000 - 3,000 = $97,000 / 26.5 = $3,660
Option B: $100,000 / 26.5 = 3,774

I had thought it would be $97,000 (your Option A), but the reg would only subtract the $3,000 initial MRD if it was paid in the valuation calendar year after the valuation date. So, if it's a calendar year plan, the 4/1/2009 initial MRD is based on a 12/31/2007 value, and the 12/31/2009 MRD is based on the 12/31/2008 value without deducting the 2008 MRD paid in 2009 (i.e., $100,000--your Option B). (Treas. Reg. Section 1.401(a)(9)-5, Q&A-3(c).)