RMD for 81 yr old paticipant in 401k
An 81 yr old employee participates in the 401(k) plan, is he required to take an RMD from the plan?
I believe the answer is that he still must take his RMDs from his IRAs but not the 401(k) that he is an active participant.
Part 2. Does this make any difference? In 2005 and 2006 he thought he was required to take an RMD from the 401(k) so he did calculate and take distributions in those years. Because he did that does he have to continue or can he just elect not to take any more distributions while he is still employed?
Thanks,
Permalink Submitted by Alan Spross on Mon, 2008-07-21 22:22
You are correct about the plan RMDs. The IRS allows RMDs to be deferred as long as the employee is still working, however a plan is also allowed to require that RMDs begin at 70.5 if they wish. The plan administrator should know which case applies with this plan. If he took distributions in prior years, the plan should be able to confirm whether they were actually RMDs or just discretionery distributions. If no RMD is required by the plan, taking distributions does NOT start a cycle of mandatory RMDs every year. There might be some unusual situations where an employee starts RMDs but then returns to work and is able to stop the RMDs.
IRA RMDS alway start at 70.5 regardless of working status.
Permalink Submitted by Al Fry on Tue, 2008-07-22 01:45
He is not a 5% or more owner of the company, is he?