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  1. 2018-7-22 the ESOP RMD Question The client is a participant (employee) in a ESOP which holds 100% of the "employer securities" of the Plan Sponsor corporation (employer). A. The client is almost 70 years of age, is currently employed and plans on continuing to work for the corporation until age 75 (W-2 income). The client-employee is presently inquiring regarding possible approaching RMD requirements and distributions. 1. We are informed that if the client-employee continues to be employed beyond age 70 1/2, then RMD distributions are not required until retirement. 2. We are also informed that if the client-employee is a "5% owner", then the exception deferring RMD distributions until retirement may not apply. 3. We are also informed that for purposes of determining the "5% owner" rule of the plan sponsor, the employer securities held by the ESOP are not used in determining the "5% owner". QUESTION 1: Is this correct? And do you have any legal authority or citation on this issue? B. Under the terms of the ESOP plan, the client-employee-participant can be offered a partial or lump-sum distribution of the employer securities (e.g. annually) which, if elected is distributed to the participant by the ESOP as employer securities under a "repurchase-buyback" provision required by the plan sponsor corporation who buys back the distributed shares resulting in the retirement income to the participant ( 1099-R). QUESTION 2 : Can the client received both W-2 income and 1099-R distributions beyond age 70 1/2 as long as he is still employed? Thank you tdslaw@cox.net
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