Search the Community
Showing results for tags '5% owner'.
Found 2 results
-
I have a question about determination of 5% owners for purposes of RMD rules. Law firm partnership has a 401(k) profit sharing plan. Several partners have P.C.s that have adopted the plan as participating employers. The owner of one of these P.C.s has just attained age 70 1/2 in 2015. He owns less than 5% of the partnership by capital interest or profits, but of course own 100% of his P.C. For testing purposes, all of the employers of the plan are aggregated under 414(m). Does aggregation apply for determining 5% owners for 401(a)(9) purposes? 5% owners are defined as under the top heavy rules, and aggregation applies for top heavy, but does that mean aggregation applies and only those who own 5% of the partnership are treated as 5% owners for RMD purposes? Put another way, is this partner's first distribution calendar year 2015 or will it be deferred until the calendar year in which he retires? -
Active Participant will attain 70 1/2 in 2014. He currently owns more than 5% of profits interest, but he will reduce his ownership by 12/31/13 to not more than 5%. Plan Year = Calendar Year. No RMD for 2014 if he continues working. Suppose in 2015 he continues working, but increases ownership to greater than 5%? Literal reading of 1.401(a)(9)-2 Q&A 2© says no required minimum distribution as long as he continues to work because the ownership test is done in the year of attaining 70 1/2. "© For purposes of section 401(a)(9), a 5-percent owner is an employee 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 employee attains age 70 1/2. " Agree that if he isn't a 5% owner in 2014, becoming a 5% owner later won't matter for RMD purposes?