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I have a very unique plan situation, one the plan that is terminating due to acquisition some of the participants are 72 1/2 and are eligible for RMD now they Advisor has stated since the participants are not terminated  from their employment in terminating plan and are just acquired by the acquiring company these participants will not be subjected to RMD  since they are not terminated employees is that true? 

Does Employment status play a key role in RMD? I thought once the participants attain 72 1/2 they are required to take the RMD also since the plan has terminated and they will be a distribution event so the participants will require to take the RMD correct?  

 

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First off, the SECURE Act changed the RMD age to 72, not 72½.

Second, please try to use punctuation. It will make your question easier to read for the rest of us.

The advisor may be correct. The required beginning date for a plan participant who is not a 5% owner is the later of age 72 or termination of employment. Termination of the plan does not require RMDs to commence for non-owners even if they are past age 72. However you said that there is an acquisition going on here. If it is was an asset sale, then the employees may in fact have experienced a termination of employment. More facts are needed.

Regardless, if a participant who is age 72 takes a total distribution as a rollover, and then terminates later in the year, part of their distribution retroactively becomes not eligible for rollover, which could cause problems. Thus it may be advisable to have participants who are over age 72 take a portion of their distribution in cash, just in case.

They should also keep in mind that if they roll over their distribution to an IRA, they will be required to commence RMDs regardless of whether they have terminated employment.

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Thank you. 

Yes, its a stock acquisition and the Plan terminated prior to the sale date.  As per the plan sponsor and their advisor these participants have not met the Required Beginning Date because they have not had a termination of employment from the terminated plan and they have simply changed employers because of the acquisition hence RMD will not be required.  Thoughts? 

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