Leaderboard

Here’s an IRS site that says SEP money doesn’t count for filing 5500EZ. https://www.irs.gov/retirement-plans/financial-advisors-are-assets-in-your-clients-one-participant-plans-more-than-250000

Many charities and other tax-exempt organizations have an accounting year meant to measure a program year, and a year ended June 30 is a common choice. Some profit-seeking businesses have seasonal or business-cycle reasons to use an accounting year with an end other than December. In my experience, it’s often simpler to administer an individual-account (defined-contribution) retirement plan with a calendar plan year, rather than a plan sponsor’s or participating employer’s accounting year. But much depends on the plan’s provisions. And on how strong or weak is the employer’s need or interest in measuring an accrual for a nonelective or matching contribution on the employer’s accounting year. If there’s a reason to revisit a selection of either the employer’s accounting year or the plan’s accounting year or other plan year, consider involving both sets of decision-makers, including each’s lawyers and accountants.

I think Lou S. offers the correct analysis. If the attorney is getting a K-1 or W-2, he is still employed and does not need to take the RMD. If he is getting a 1099, then he has term'd employment and does need to take the RMD.

While Gadgetfreak is right to mention the 5%-owner variation, consider further that whether a participant is or was “a 5-percent owner (as defined in section 416)” for § 401(a)(9) is determined “with respect to the plan year ending in the calendar year in which the employee attains the applicable age[.]” Internal Revenue Code of 1986 (26 U.S.C.) § 401(a)(9)(C)(ii)(I). “For purposes of section 401(a)(9), a 5-percent owner is [a participant] 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 [participant] attains the applicable age.” 26 C.F.R. § 1.401(a)(9)-2(b)(3)(ii) https://www.ecfr.gov/current/title-26/part-1/section-1.401(a)(9)-2#p-1.401(a)(9)-2(b)(3)(ii). Nancy’s query supposes that the lawyer “changed status . . . in 2021 when he attained age 70.” Many law firms’ partnership agreements provide age 70 as a mandatory or presumptive retirement age. Often, a retired partner continues working, but on a less active schedule. A change in classification from an active partner to an inactive or retired partner often involves adjusting or redeeming a partner’s capital interests, profits interests, or both. By 2024 or the other relevant year in which the participant reached age 73, he might no longer have been a 5% owner. For a participant not constrained by the 5%-owner variation, one’s required beginning date might follow from the later of one’s applicable age and “[t]he calendar year in which the [participant] retires from employment with the employer maintaining the plan.” 26 C.F.R. § 1.401(a)(9)-2(b)(1)(ii) https://www.ecfr.gov/current/title-26/part-1/section-1.401(a)(9)-2#p-1.401(a)(9)-2(b)(1)(ii). Again, a service provider might suggest that the plan’s administrator check carefully the facts and consider prudently how relevant law applies regarding the facts found.

In lawyers’ and law firms’ lingo, the label “of counsel” has no one settled meaning. It can relate to any of many kinds of relationships. It can, in context, refer to a current partner, a retired partner, an employee, or a nonemployee contractor. Does the of-counsel lawyer provide any service? Even having a lunch conversation with a client’s inside counsel or executive to help keep the client content with the relationship might be a valuable service. Don’t reflexively assume this person is retired. Suggest the plan’s administrator decide whether the participant is or isn’t retired (in the sense Internal Revenue Code § 401(a)(9) uses that word). If the law firm feels unready to interpret § 401(a)(9) and how it applies regarding the facts, you can suggest that the firm might get another lawyer’s advice.

yes, if there is a cchange in both the firm and the actuary