RMD empl status is "layed off"

[pmacduff]

Construction Co - non-owner participant over 70 1/2 still working and contributing to his 401(k) account; has not begun RMDs per plan provisions.

He may be temporarily layed off for one or two months this winter. It's anticipated he will return by Feb of 2012.

If the participant was layed off December 1st, for example, is the plan required to pay out an RMD for 2011?

[ETA Consulting LLC]

No. He must be severed from employment; not merely layed off. The sponsor should maintain accurate employment records that properly differentiates "layoff" and "termination".

Good Luck!

[pmacduff]

Thanks ERISA. Due to the nature of the business, the client does have distinction between the two. However in rare cases some of those layed off do not return to work and are then formally termed. They didn't want to have an issue with the Plan if this participant for any reason does not return whereby a review of the Plan would say he should have gotten an RMD in 2011.