5% owner for RMD when company is owned by a trust

We have a plan where the ownership is a trust.

I believe this means the trustees of the trust are deemed to be the owners - is that correct?

So if an employee is a trustee of the the trust they are deemed to be a 5% owner, correct?

Does it matter if there is more than one trustee?  For instance if there are 4 are the all deemed to be 25% owners of the trust?  Or are they all 100% - or does it vary?

I don't know what I don't know here.

The answer is fairly involved and you should consider having legal counsel assist in assessing whether or not there is ownership.  They could provide guidance on:

• Does the trustee have "beneficial interest" in the trust and, if so, what is the individual's interest.
• Are there "constructive ownership/attribution" rules that would determine if the trust beneficiaries have ownership in the trust's interest.
• Is the trust a grantor-trust and is the trustee treated as an owner.

None of this is in my wheelhouse and I am only peripherally familiar with some of these considerations.  Some of our BL colleagues likely are more qualified to provide additional details. 

To count stock shares, other capital interests, profits interests, or other ownership rights a participant gets indirectly through a trust, one looks to the trust’s beneficiaries and each beneficiary’s beneficial interests.

The many points of tax law one might apply or consider could include (at least):

Internal Revenue Code § 1563 and Treasury’s interpretation; see 26 C.F.R. § 1.1563-3(b)(3)(i) https://www.ecfr.gov/current/title-26/part-1/section-1.1563-3#p-1.1563-3(b)(3)(i).

“[T]he actuarial interest of each beneficiary is determined by assuming the maximum exercise of discretion by the [the trust’s trustee or other] fiduciary in favor of such beneficiary[.]”

Measuring some beneficial interests, especially those involving contingencies about when an interest begins or ends or regarding a person’s life or death, might call for estimated actuarial measures.

Among ways, see 26 C.F.R. § 20.2031-7 https://www.ecfr.gov/current/title-26/section-20.2031-7.

(Looking to each beneficiary’s percentage of the trust’s distributable net income shown on a Form 1041 income tax return or its K-1 tax-information reports often is not an accurate measure of beneficial interests to determine whether a retirement plan participant is a more-than-5%-owner.)

A trustee might have a personal beneficial interest depending on what powers and how much discretion the trustee has.

Property (including capital or profits interests in a business) of a grantor trust might be treated as the grantor’s property.

A trust for an employee stock ownership plan is a different situation.

To sort out these and other tax law points, the retirement plan’s administrator must consider all the terms of a trust, which will require reading the documents governing the trust and might require reading a State’s law governing trusts.

This is not advice to anyone.