Quick question and answer: Husband of owner needs RMD after 70.5?

[Lori H]

She owns. He works. I know family aggregation applies for controlled groups, but what about in the case of RMD's?

[J Simmons]

She owns. He works. I know family aggregation applies for controlled groups, but what about in the case of RMD's?

IIRC, the stain of her ownership would preclude him from having an RBD later than April 1 after the calendar year in which he reached age 70.5 even if he is yet working.

Lori, here you go. Section 1404(a) of the Small Business Job Protection Act of 1996 added IRC § 401(a)(9)©, subpart (ii) of which refers the 5% ownership to the Key Employee ownership provisions under IRC § 416. See also Treas Reg § 1.401(a)(9)-2, Q&A-20.

IRC § 416(i)(B)(iii) (as well as Treas Reg § 1.416-1, T-18) provides that the attribution rules of IRC § 318 apply for the purpose of who owns 5% or more of the employer, for key employee determination purposes (and thus for those on the later-than-70-1/2 active employee's RBD). IRC § 318(a)(1) attributes ownership between spouses.