is mother of owner entitled to defer 70 1/2 distribution?

[k man]

when her son is 5% owner do 318 attribution rules apply?

[FundeK]

I pulled this from the ERISA Outline book, Chapter 6, Section VII (minimum distributions)

1.d.2) Attribution rules apply to determine ownership. To determine whether a participant is a 5% owner, the attribution rules under IRC §318 apply. These attribution rules are made applicable through IRC §416, which is cross-referenced in the RBD definition in §401(a)(9)©. For example, suppose the company employs the mother of the 100% owner of the company. By attribution under §318, the owner's mother is a 5% owner. See IRC §318(a)(1)(A)(ii). The

mother's RBD is April 1 of the year following the year she reaches age 70½, even if she continues working for the company. The §318 attribution rules are explained in Part A. of the attribution definition in Chapter 1.

[mbozek]

The 318 attribution rules only apply if the sponsor is a corporation. If the busienss is unincorporated the attribution rules do not apply to family members.

[Blinky the 3-eyed Fish]

Mbozek, that is not correct for pension plan purposes. For example, a mother working for her son's sole proprietorship WOULD be attributed his ownership.

[mbozek]

Blinky- you have a cite for that statement? IRC 318 only applies to corporations. You should check the 401(a)(9) regs.

[Appleby]

See Treas Reg § 1.416-1, Q&A T-17

Who is a 5-percent owner of the employer?

A. If the employer is a corporation, a 5-percent owner is any employee who owns (or is considered as owning within the meaning of section 318) more than 5 percent of the value of the outstanding stock of the corporation or stock possessing more than 5 percent of the total combined voting power of all stock of the corporation. If the employer is not a corporation, a 5-percent owner is any employee who owns more than 5 percent of the capital or profits interest in the employer.

[Belgarath]

Yes, and see 1.401(a)(9)-2, Q&A-2 ©, which refers you to the 416 definition of a 5% owner for purposes of 401(a)(9).

[mbozek]

Isnt there a difference in defining who is a 5% owner between a corporation and an unicorporated business? The attribution rules applicable to corporations in the parthentical is not present in the sentence defining who is a 5% owner in an unincorporated business.

[Blinky the 3-eyed Fish]

There is no difference. Is it that you are reading §318 but not considering the expanded definition that Appleby cites? (I have not personally read §318 lately.)

[GBurns]

And 318 states "Attribution from partnerships, estates, trusts, and corporations.-" thereby clearly not limited to corporations as stated by mbozek.

The Treas Regs 1.401(a)(9) also cited by mbozek were no different in addressing other than only corporations.