Owner of company
I have a client who is more than a 5% owner of a company and his dob is 3/1/1939. He didn’t have to take a distribution this year from his company’s plan, but he will have to start next year correct? I think there are many advantages for him to rollover his balance into an IRA. Are there any advantages for him to leave the money in the company plan?
Permalink Submitted by Alan Spross on Tue, 2009-09-15 18:57
Right, RMDs start next year unless Congress continues the waiver into 2010. Probably unlikely that will happen now.
Potential advantages of maintaining the plan balance:
1) If the plan offers loans and he might need one
2) Unless he and spouse are only employees covered, the plan is probably ERISA qualified. That means unlimited creditor protection except for the IRS and spousal settlements. An IRA receives less creditor protection and is dependent on state laws. CA, for example offers very limited IRA protection.
3) If there are any unique, low cost, and valuable investment options in the plan.
RMD obligations are the same for either plan.
Permalink Submitted by [email protected] on Tue, 2009-09-15 19:09
Thank you for the quick response