Is employer/plan sponsor required to permit deferrals past age 70.5

[Guest kprhok]

Two questions I can't seem to resolve for a client......(even though I doubt they would actually adopt such provisions)

Are 401(k) plan sponsors required to allow participants to continue to make elective contributions if working past 70.5 or does each plan set their own rules?

Are 401(k) plan sponsors required to allow participants to continue to defer (not take minimum distributions) if still working with the employer past age 70.5, or is this governed by the plan document provisions adopted by the sponsor?

Thanks for feedback and any citations to regs if available.

[masteff]

Yes on on the first, absolutely required to allow them to continue contributing.

410(a)(2) -- A trust shall not constitute a qualified trust under section 401(a) if the plan of which it is a part excludes from participation (on the basis of age) employees who have attained a specified age.

Edit: just figured out the difference between your questions... will get back to you on the later.

Edit 2:

No on the second, not required depending on what the plan text says.

Reg 1.401(a)(9)-2 Q&A-2, part (e) reads "A plan is permitted to provide that the required beginning date for purposes of section 401(a)(9) for all employees is April 1 of the calendar year following the calendar year in which an employee attains age 70½ regardless of whether the employee is a 5-percent owner."

If the person is a 5-percent owner, they can't defer past April 1 even if still in employment.

[Guest kprhok]

Thanks very much for the reponse and the citations.

[Tom Poje]

I'm not aware of any rule that does not permit deferrals after age 70 1/2, except for IRAs - and that pertains to all individuals.

[Belgarath]

Tom - I think he meant "can't defer receiving RMD's," not "can't make elective deferrals."