RMD while working
Does anyone know where in the code it says RMDs can be postponed while the 70.5+ year old is still working and participating in a qualified plan?
Does anyone know where in the code it says RMDs can be postponed while the 70.5+ year old is still working and participating in a qualified plan?
Permalink Submitted by Alan Spross on Fri, 2009-01-30 18:06
1.401(a)9-2 Q&A 2 copied below:
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Q–2. For purposes of section 401(a)(9)(C), what does the term required beginning date mean?
A–2. (a) Except as provided in paragraph (b) of this A–2 with respect to a 5-percent owner, as defined in paragraph (c) of this A–2, the term required beginning date means April 1 of the calendar year following the later of the calendar year in which the employee attains age 70 1/2 or the calendar year in which the employee retires from employment with the employer maintaining the plan.
(b) In the case of an employee who is a 5-percent owner, the term required beginning date means April 1 of the calendar year following the calendar year in which the employee attains age 70 1/2 .
(c) For purposes of section 401(a)(9), a 5-percent owner is an employee who is a 5-percent owner (as defined in section 416) with respect to the plan year ending in the calendar year in which the employee attains age 70 1/2.
(d) Paragraph (b) of this A–2 does not apply in the case of a governmental plan (within the meaning of section 414(d)) or a church plan. For purposes of this paragraph, the term church plan means a plan maintained by a church for church employees, and the term church means any church (as defined in section 3121(w)(3)(A)) or qualified church-controlled organization (as defined in section 3121(w)(3)(B)).
(e) A plan is permitted to provide that the required beginning date for purposes of section 401(a)(9) for all employees is April 1 of the calendar year following the calendar year in which an employee attains age 70 1/2 regardless of whether the employee is a 5-percent owner.
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It is important to note that (e) above clarifies that a plan is allowed to make 70.5 apply to all employees if desired. Therefore, in these cases the RBD cannot be postponed. Further, since 70.5 in these cases is a PLAN RBD and not a statutory RBD, any RMDs taken by that employee can be rolled over to an IRA. This is true because they are not considered to be RMDs once the employee receives them.
Permalink Submitted by Al Fry on Fri, 2009-01-30 19:34
And, of course we are only talking about the QRP where the person is still working, not any other QRPs or IRAs, with which RMDs would still be required.