When do you need to make minimum distributions in a Profit Sharing Pla

[Guest Michael Anderson]

We have an over 5% owner of a sole proprietorship who has a profit sharing plan. He will turn 70 1/2 in 2002 and is still working full time. Does he need to take minimum distributions from the profit sharing plan? Does he need to from his personal IRA? Thanks for your help!

[pmacduff]

IRAs did not change - still need to take minimums, however can combine from all IRAs & take one minimum. Qualified Plan - because he is a >5% owner, he is still required to take the minimum distribution, even if he is still working. Only those 70 1/2 who are not >5% owners and still working are exempted from their minimum requireds. Hope this helps.

[Tom Poje]

and since the person turned 70 1/2 in calendar year 2002, the minimum distribution is due 4/1/2003, though some prefer to pay by 12/31/2002 to avoid 2 distributions in the same year.

The latest regulations, at least based the data I read last week say:

for 2002, one may follow the 1987 proposed regs, the 2001 proposed regs, or the final regs!!!!!!

If using the final regs, you have to amend the plan (of course) identifying the date chosen to follow the final rules.

The final regs allow you to use the new uniform lifetime table

(e.g. age 70 = 27.4, age 71 = 26.5 for the factor in determining the amount of distribution)

http://www.cigna.com/professional/pdf/2002...Regulations.pdf