RMD

[Guest glhotdog]

Facts: Participant, former 5+% owner begins receiving RMD at age 70.5. Participant takes RMD during the next 3 years, during which time his ownership is purchased by other owners. Participant becomes a 0% owner, remains employed and continues to participate in 401(k) plan. Participant would like to suspend any further RMD's siteing the fact that he is no longer a 5+% owner. The Plan document allows for Non-Owner Participants to be exempted from RMD until separation of employment.

Question: Can the RMD's, once begun, be suspended at the request of the Participant, to be resumed at a later date or terminationn of employment? Or must the RMDs continue to be calculated and distributed each year.

[My 2 cents]

Entry level question: Can someone who was a 5% owner after age 70 1/2 ever stop being considered a 5% owner?

[BG5150]

From an IRS publication:

A 5-percent owner, determined for the plan year ending in
the calendar year in which the employee attains age 70½, is
defined in IRC 416. If distributions have begun to the 5%
owner, they must continue, even if the participant is no
longer a 5% owner.

(emphasis mine)

From:

www.irs.gov/pub/irs-tege/epch602.pdf‎

[pmacduff]

I had a similar situation and looked up in both the Pension Answer Book and Sal's books. Once the RMDs have begun, they cannot stop, regardless of change of ownership....

[Guest glhotdog]

Thank you to all! Confirmed our thoughts and direction to client.