No RMD requirement

[Treasur2]

I have an attorney firms staff person asking me about the one, and only, scenario I am familiar with when you don't have to take RMDs past 70.5. That is when you continue to work past 70.5, and ..ALL....your "retirement" money is in your employers retirement plan and you are "active" or "participate".

I would very much like to send them some code links, rulings, rules, etc. regarding this. But thought it best to seek help here. In my mind it's more of a logical "loophole" than a stated rule. So can any one supply one or more URLs to such documentation?

[DaveinTexas]

Not stated, exactly

I have an attorney firms staff person asking me about the one, and only, scenario I am familiar with when you don't have to take RMDs past 70.5. That is when you continue to work past 70.5, and ..ALL....your "retirement" money is in your employers retirement plan and you are "active" or "participate".

I would very much like to send them some code links, rulings, rules, etc. regarding this. But thought it best to seek help here. In my mind it's more of a logical "loophole" than a stated rule. So can any one supply one or more URLs to such documentation?

There is a provision in the IRC, IRC Section 401(a)(9)(C)(i)(II) where it states:
(C)Required beginning date.—For purposes of this paragraph—
(i)In general.—The term “required beginning date” means April 1 of the calendar year following the later of—
(I) the calendar year in which the employee attains age 70½, or
(II) the calendar year in which the employee retires.

That last line, "the calendar year in which the employee "retires". So, it appears there is a provision in the code that does not specifically address whether an RMD is required if the employee is still working, but some have taken this section of the code as an exception to the requirement of the RMD if the employee is still working.

Also not mentioned is whether the RMD is not required for ALL qualified accounts/plans, or merely the account/plan of the employer the employee is still working for, which would be a safe assumption. I would also want to know from the employer plan administrator if they allow for a 70+ year old to not receive an RMD; check the plan rules. Also, make sure the participant doesn't own greater than 5% of the company that holds the plan.

Here's a decent article on this topic: https://www.kitces.com/blog/still-wo...percent-owner/

[JohnH]

If Michael Kitces endorses the article, that's all I need to know. He is highly respected on the "bogleheads" forum and is one of those rare financial advisors whom I actually trust & respect.

[New York Enrolled Agent]

Dave - does Reg. §1.401(a)(9)-2, Q&A 2 clarify any concerns???

A-2.
(a) Except as provided in paragraph (b) of this A-2 with respect to a 5-percent owner, as defined in paragraph (c) of this A-2, the term required beginning date means April 1 of the calendar year following the later of the calendar year in which the employee attains age 701/2or the calendar year in which the employee retires from employment with the employer maintaining the plan.
(b) In the case of an employee who is a 5-percent owner, the term required beginning date means April 1 of the calendar year following the calendar year in which the employee attains age 701/2.
(c) For purposes of section 401(a)(9), a 5-percent owner is an employee who is a 5-percent owner (as defined in section 416) with respect to the plan year ending in the calendar year in which the employee attains age 701/2.
(d) Paragraph (b) of this A-2 does not apply in the case of a governmental plan (within the meaning of section 414(d)) or a church plan . For purposes of this paragraph, the term church plan means a plan maintained by a church for church employees, and the term church means any church (as defined in section 3121(w)(3)(A)) or qualified church-controlled organization (as defined in section 3121(w)(3)(B)).
(e) A plan is permitted to provide that the required beginning date for purposes of section 401(a)(9) for all employees is April 1 of the calendar year following the calendar year in which an employee attains age 701/2regardless of whether the employee is a 5-percent owner.

[DaveinTexas]

Good on ya, NYEA

Nice find sir, that is why I no longer trust “the Google” for my searches!

Good and clear explanation.