Employees over age 70-1/2

[richard]

Can a DB or DC plan established in 1997 have the following provisions for active employees (non-5% owners) over age 70-1/2?

A. Assuming they are still actively employed, they must start taking their distribution by age 70-1/2 (actually the April 1st, etc.) as if they were 5% owners.

B. Assuming they are still actively employed, they must wait to take their distribution until they terminate employment. (No problem here, right)

C. Assuming they are still actively employed, they are given THE CHOICE of taking their minimum distribution by age 70-1/2 (and each succeeding year) or waiting until they actually terminate employment to receive their distribution. (Any issues of contructive receipt here?)

Any differences between DB and DC Plans?

Any differences between plans in effect prior to SBJPA and those established after SBJPA?

Thanks.

[IRC401]

A significant percentage of DC plans give employees the right to take an in service distribution at a specified age, usually 59 1/2 or normal retirement age. There would be no qualification or constructive receipt problem letting or requiring employees to take distributions at 70 1/2. (Ok, you could in theory have a 411(d)(6) problem.)

Consider the plan administration issues with a DB plan. Do you want to start making monthly payments while a participant is still accruing benefits? My advice is KISS (Keep it simple, stupid.)