RMDs in ERISA qualified plans

Submitted by Jim Musgrave on Fri, 2021-08-13 11:08

A TPA I talked to last week mentioned that if you are currently working at age 72 or older and participating in a 401k, you don’t have to take RMD’s from your 401k. Is this correct? If it is correct, does the same apply to solo 401ks? I have a new client who is 70 and has no intention of retiring soon. If she has a solo 401k, does she have to take RMDs at 72 assuming she still has earned income from her business?



Submitted by William Tuttle on Fri, 2021-08-13 12:15

Yes, there is a still working RMD exception, but it does not apply to > 5% owners. Also, a one-participant 401k is not an ERISA qualified plan.

Submitted by Jim Musgrave on Fri, 2021-08-13 13:17

Would you mind pointing me to the section in the code that explains this RMD exception? This one concept opens tax planning ideas.

Submitted by William Tuttle on Fri, 2021-08-13 15:15

26 U.S. Code 401(a)(9)(C) and 26 CFR § 1.401(a)(9)-2 – Distributions commencing during an employee’s lifetime

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