RMD Question

[Guest SueJ]

A participant over 70.5 works 4 - 5 hours per week. A break-in-service is considered less than 500 hours.

Although participant has taken an RMD in the past, she did not take a RMD in 2002. Plan allows active participants to take a distribution one year and defer in another.

With the small amount of hours worked, would she still be considered an active employee for deferring the minimum distribution?

[Guest RBeck]

How is the plan tracking service? By HOS or elapsed time?

[Guest SueJ]

They track by HOS.

[jaemmons]

Am I missing something? How can they "flip flop" from year to year? I thought that a non-5% owner could defer the RMD payment but that deferrment would be to the year following the year they actually retire from the company (provided the plan allows for the deferrment).

I don't understand why hours of service is even relevant, because if they are still being paid to work there, regardless if their pay status has changed (eg-full time to part time or salaried to hourly) they are still an employee and if they elected to do so, may continue deferrment until they no longer work there.

Someone please help me if I have grossly overlooked anything.

[Guest SueJ]

The document allows "any Participant who has not had a separation from Service and is currently in benefit payment status because of attainment of age 70.5 may elect to stop distributions and recommence by April 1 of the calendar year following the calendar year in which the Participant retires."

So I guess that is my answer.....because working less than 500 hours constitutes a break-in-service for this plan, she would not qualify under the above.