Age 70 1/2, and >5% owner

Submitted by Stephen Csenge on Fri, 2011-03-11 18:42

Have a small business 401k where the owner of the company and still active employee / participant will reach 70 1/2 this year. He has no other IRA’s or QRP accounts. In reviewing Natalie Choates book, it seems pretty clear that he will not be able to postpone his RBD as he owns more than 5% of the company. What I’m not clear on is since he is still employed and eligible, can he still contribute to the 401k even though he has to take RMD’s going forward?



Submitted by Alan Spross on Fri, 2011-03-11 19:39

Yes, age discrimination protection requires qualified plans to accept contributions regardless of age. In this case, that means that contributions can continue while RMDs must also be distributed each year.



Submitted by Stephen Csenge on Mon, 2011-03-14 14:18

Awesome, thanks for the help



Add new comment

Log in or register to post comments