5 percent owner rule for RMDs

[Nassau]

A 5% owner turned 70 on 03/28/2013 and then was no longer a 5% owner on 04/01/2013. Was this participant required to satisfy their RMD require for 2013? (Knowing that they could push off the initial payment until April 1, 2014.)

[Lou S.]

I think 1.401(a)(9)-(2), Q & A #2 is the relevant regulation

© For purposes of section 401(a)(9), a 5-percent owner is an employee who is a 5-percent owner (as defined in section 416) with respect to the plan year ending in the calendar year in which the employee attains age 70½.

Based on this he turns 70 1/2 in 2013 and his highest ownership at any time in 2013 is more than 5% therefore he's a 5% owner. I believe he would have had to become a less than 5% owner on of before 12/31/2012 to avoid the required 2013 RMD (assuming he is still working for the company).

Also because he is considered a 5% owner for 2013, he will be considered a 5% owner for RMDs in subsequent years.

If someone else has a different view I'd be curious as to what I've got wrong here.

[masteff]

I agree w/ Lou.

This prior discussion specifically addresses the "as defined in Section 416" bit of what Lou cited: http://benefitslink.com/boards/index.php?/topic/47056-rmd-change-in-ownership/

Multiple other prior discussions: https://www.google.com/search?as_q=5%25+owner&as_epq=&as_oq=mrd+OR+rmd&as_qdr=all&as_sitesearch=benefitslink.com%2Fboards&as_occt=any&safe=images (had to use a google search since the board's search doesn't like short terms like "5%")