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Plan year concept.

To clarify slightly, the RBD is determined based on the plan year ending in the calendar year in which the employee attains age 70 1/2. It is not based on whether or not the person actually owns 5% on the date they turn 70-1/2. If the 5% owner in question is turning 70 on or before June 30 of this year (assuming plan year is calendar year), then they will turn 70-1/2 during 2019. They were a 5% owner with respect to the 2019 plan year, so 2019 is a distribution calendar year for them and their RBD will be 4/1/2020. If their 70th birthday is between July 1, 2019 and December 31, 2019, then they would have until December 31, 2019 to dispose of their ownership interest to avoid being subject to RMDs.