Leaderboard

I think it's pretty clear. Based on OPs question, he turned 70 1/2 in 2019 while he was a 5% owner. He was a 5% owner in the plan year ending in the calendar year he turned 70 1/2, which means he takes RMDs as a 5% owner. The fact that the 2020 RMD was waived, and that he sold his ownership interest, is immaterial. He is due an RMD for 2021 as a 5% owner, you cant unring that bell.

Sorry, I think I misread your first statement and thought you had plan factors for the lump sum as well. Is this a potential 415 limited lump sum? If so, then it does get more complicated. Ignoring 415 limits, you would apply the 417e rates to the normal form (10cc). No need to convert to Life Only before determining the LS, unless 415 limits are in play. You would use the 417(e) interest rates and applicable mortality table to determine the LS value of the deferred/immediate 10CC accrued benefit. The plan document should tell you what rates to use, whether to use the immediate or deferred AB, and what do with early retirement subsidies, if any. Typically, the LS is the PV of the deferral annuity in the normal form, but not always.

Peter, I'll assume that all five prongs of the regulations' definition are met, but there is no compensation, direct or indirect. The "rubber hits the road" when something or other "hits the fan." If the plan has a perceived investment loss that is perceived to be attributable to the advice provided by the person who is donating her effort, would a lawsuit by the plan in federal court under ERISA survive a motion for summary judgement? Tough question, but my guess is that the uncompensated adviser would skate for the reason you have explained, although her legal expenses could be significant, and if she has an agreement with the plan that says she works for free, but is indemnified for anything, let alone legal fees, I think that is probably "consideration". But now the plan is in a position where, had it paid for the service instead of accepting it gratis, it would have had recourse against the adviser with respect to the loss sustained by the plan. I agree with QDROphile's suggestion that at this point the plan's named fiduciaries would need to think about their own liability for having entered into a defective service provider agreement. If this is informal and infrequent advice, I think I would try to get more comfortable with the "primary basis" and "regular basis" prongs of the definition before hanging my hat entirely on the absence of consideration.

No citations handy, but I just looked at it this morning, and after some cross referencing: 5% owner on any day of the plan year that ends in the calendar year in which the employee turns 70 1/2 or 72