401K Question
Hello,
There is a family business owned by two siblings with a 401k. The siblings own the company 80% and 20%. Their father also works for the company and he turns 72 (RMD age) next year. The question is….under the “still working” exception that allows delayed RMDs for non-5% owners of a company, can the Father delay is RMD?
I am reading that ( in IRC section318) it’s possible that ownership of adult children may be attributed to parents. So because the father’s kids own 100% of the company, does that ownership percentage get attributed to him, thus requiring him to take RMDs due to his attributed ownership from his kids?
Any help would be greatly appreciated. Thank you.
Permalink Submitted by Alan - IRA critic on Thu, 2022-11-10 17:55
Yes, the family attribution rules of Sec 318 apply here, and he will have to take RMDs if his children still own the company on 12/31/2023, the end of the year he reaches 72. 2023 would become his first RMD distribution year, with an RBD of 4/1/2024. Further, once his RMDs start under this rule, they must continue even if the children subsequently sold the business after 2023.