5% owner over 70.5 & Contributions

Submitted by Nick Pappas on Thu, 2017-01-19 16:15

My understanding from this forum is that a 5% owner over 70.5 is required to take his RMDs but he IS allowed to still make contributions to the 401k.

My need/questions is where can I find this in the regs? My office is debating this fact and we are finding conflicting information on the web. I told them that Alan’s word (from prior post) is the gospel but understandably so they wish to have official document stating this is correct.

Any assistance in this matter would be greatly appreciated.

Regards,
Nick



Submitted by Alan - IRA critic on Thu, 2017-01-19 17:52

Nick, here is Sec 410(a)(2) stating that there are no age limits. Actually, all plans do not have age limits with the exception of traditional IRA accounts. SEP and SIMPLE IRAs have RMDs while contributions can continue. Here is the referenced code section:

(2) Maximum age conditions

A trust shall not constitute a qualified trust under section 401(a) if the plan of which it is a part excludes from participation (on the basis of age) employees who have attained a specified age.

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