RMD for Sole Proprietor Starting Business at Age 73?

[CuseFan]

Have sole proprietor who started business at age 73 and started pension plan at age 74. Is this person a 5% owner required to start RMDs when vested? A prior thread in BL seemed to indicate no, and page 5 of the recent EA conference session on RMDs (attached) backs that up, but does anyone have definitive reg cite or IRS guidance to confirm? All other research I've done does not support this nuance. Thanks

303 - Required Minimum Distributions.pdf

[NJ Mike]

Did you look at Code Section 401(a)(9)(C)?

Mike

[Tom Poje]

1.401(a)(9)-2  Q-2(c)

a 5-percent owner is an employee who is a 5-percent owner with respect to the plan year ending in the calendar year in which the employee attains age 70 1/2

 

Apparently, since he was not  a 5% owner the year he turned 70 1/2 he would not be considered a 5% for min distrib purposes. (e.g. ignoring sole proprietorship, lets suppose he simply was a run of the mill employee who became a 5% owner after turning 70 1/2. same logic, he was not a 5% owner at age 70 1/2 and as long as he is working, no minimum distribution.

[CuseFan]

Thanks

[C. B. Zeller]

On 4/30/2018 at 11:06 AM, Tom Poje said:

e.g. ignoring sole proprietorship

What would be the right way to account for sole proprietorship? I can see an argument that says since a sole proprietor is considered to be indistinguishable from the business, they are always considered to be a 5% owner, even before business activity begins.