Solo 401k and LLC partnership RMD rules

Submitted by abraham boznick on Sun, 2023-11-19 05:47

A client is part of a solo 401k LLC partnership. Him and his son are the only members of the LLC. The son owns 97% of of the LLC and the client owns 3% of the LLC from the LLC inception. Can the client avoid RMD distributions from 401k LLC partnership as he is less than 5% of the LLC? Can the client also transfer funds from his IRA account to solo 401k LLC partnership account and avoid paying RMD on the transferred amount?



Submitted by Alan - IRA critic on Sun, 2023-11-19 15:05

  • No, the “family attribution” rules attribute the son’s ownership to the client, and therefore for RMD purposes the son is a 100% owner, and RMDs cannot be delayed.
  • The >5% ownership test is determined in the year that client would be RMD age (either 70.5, 72, or 73 based on client’s DOB). Therefore if client did not have any ownership until after that particular year passed, the client would not be treated as a >5% owner for RMD purposes, and RMDs from the plan could be avoided. If the plan then accepts IRA rollovers, client could roll over the IRA after taking the IRA RMD for that year.


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