RMD rollout of plan prior to termination and RBD

Hypothetical: Non-5% owner is age 75 and rolls 100% of balance to IRA in May 2019.  Terminates employment in August 2019.  It seems there may be an RMD requirement.   But if he had not terminated employment there would be none.

Another example: Non-5% owner 70 years old retires in April 2019.  He will turn 70 1/2 in November 2019.  He requests 100% rollover in July.  I don't believe there is any question - he must take RMD and rollover the balance in July even thoguh not yet 70 1/2.  

#1 - When the employee terminates in August he creates an RMD for 2019. A portion of his rollover equal to the RMD is now no longer eligible for rollover.

#2 - First distribution must satisfy RMD; RMD must be processed before rollover of balance.

It would be nice if the IRS wrote the rules in such a way that the RMD is not requires in #1 since at the time of the rollover no RMD was required at  that point, but the IRS has rarely been about what is easy.

Even their SIMPLE plan is not.

On 11/8/2019 at 2:54 PM, Lou S. said:

#1 - When the employee terminates in August he creates an RMD for 2019. A portion of his rollover equal to the RMD is now no longer eligible for rollover.

#2 - First distribution must satisfy RMD; RMD must be processed before rollover of balance.

It would be nice if the IRS wrote the rules in such a way that the RMD is not requires in #1 since at the time of the rollover no RMD was required at  that point, but the IRS has rarely been about what is easy.

Even their SIMPLE plan is not.

Lou,

The last sentence of the Tom’s question #1, can you address it?  “But if he had not terminated employment there would be none” 

My assumption is if the non5% owner were still active he/she would not have RMD’s until the following year (on the IRA only) 

1 hour ago, Rgoose27 said:

Lou,

The last sentence of the Tom’s question #1, can you address it?  “But if he had not terminated employment there would be none” 

My assumption is if the non5% owner were still active he/she would not have RMD’s until the following year (on the IRA only) 

You are correct that an active non 5% owner would not have to have an RMD on the pension plan.  However, rolling the funds to an IRA would require the RMD.