RMDs in ERISA qualified plans
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?
Permalink 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.
Permalink 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.
Permalink 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