Minimum Required Distributions

[Guest pjrieck]

FACTS: A business owner is currently receiving minimum required distributions, sells his or her interest in a business, remains an active employee, and the plan document permits an active participant in payment status to discontinue minimum required distributions.

QUESTION: When is the participant no longer considered a 5% owner and eligible to discontinue minimum required distributions?

[kocak]

My understanding is that if a participant is a more than 5% owner in the year they turn 70.5, then even if at a later date they are no longer an owner, they must continue receiving minimum distributions.

michele

[BPickerCPA]

I agree with Michele.

The laws that you have to start distributions by the required beginning date and continue them over what the regs now call the uniform table. If you're a 5% owner you hit the RBD at 70½, and there is nothing in the law that permits you to stop once you've hit the RBD, even if you wouldn't have hit the RBD at 70½ under current circumstances.

[Guest pjrieck]

Thanks. I guessed that this was going to be the answer.

[Appleby]

Just want to add the cites:

In accordance with IRC 318, 416(i) and Notice 97-75 ...once you are a 5 percent owner, required minimum distributions must continue even if the employee ceases to be a 5 percent owner

Notice 97-75 is attached