fb-rmd-0031
{
"person": "Employee, age 75, born in 1951, still working full-time for the company that maintains her 401(k) plan",
"facts": "She owns 8 percent of the company and owned it throughout the plan year ending in the calendar year she attained the applicable age. The plan is neither a governmental nor a church plan. She has taken no distributions, reasoning that RMDs wait until she retires.",
"question_context": "Whether her continued employment defers her required beginning date."
}Does this employee's continued employment defer her required minimum distributions from the plan? Answer with exactly one option id.
no-five-percent-owner— No — a 5-percent owner's required beginning date is April 1 after the applicable-age year, regardless of continued employmentyes-still-working— Yes — the still-working rule applies to every employee of the plan sponsoryes-if-plan-permits— Yes, provided the plan document adopts the deferral
no-five-percent-owner
1.401(a)(9)-2(b)(3)(i) fixes a 5-percent owner's required beginning date at April 1 of the year following the applicable-age year, with no retirement prong. Owning 8 percent in the plan year ending in her applicable-age year makes her a 5-percent owner under (b)(3)(ii), so the later-of rule of (b)(1) — and with it the still-working deferral — does not apply to her.
Selects no-five-percent-owner, citing (b)(3)(i).
“In the case of an employee who is a 5-percent owner, the employee's required beginning date is April 1 of the calendar year following the calendar year in which the employee attains the applicable age.”
Each quoted passage is exact-matched, after typographic normalization, against the corpus text fetched from the issuing authority (hashes in the corpus manifest). An item whose quote stops matching fails the build.
“In the case of an employee who is a 5-percent owner, the employee's required beginning date is April 1 of the calendar year following the calendar year in which the employee attains the applicable age.” — cfr-1-401a9-2
The employee owns 8 percent and the scenario stipulates that she held that ownership throughout the plan year ending in the calendar year she attained the applicable age. Because the plan is neither governmental nor a church plan, the stated exceptions do not apply. Her required beginning date therefore does not depend on retirement, so continued employment does not defer her RMDs.
“In the case of an employee who is a 5-percent owner, the employee's required beginning date is April 1 of the calendar year following the calendar year in which the employee attains the applicable age.” — cfr-1-401a9-2
Paragraph (b)(1) supplies a later-of applicable-age-or-retirement RBD only except as otherwise provided in (b). Paragraph (b)(3)(i) is that exception: a 5-percent owner’s RBD is April 1 following the applicable-age year, with no retirement prong. Under (b)(3)(ii) the 5-percent-owner test is applied to the plan year ending in the applicable-age year; the stipulated 8 percent ownership throughout that year places her in (b)(3). Paragraph (b)(3)(iii) does not take her out because the plan is neither governmental nor church. Paragraph (b)(4) only lets a plan impose an earlier uniform age-based RBD on everyone; it does not let a plan restore a retirement deferral for 5-percent owners. Continued employment therefore does not defer her RMDs, so no-five-percent-owner is the right option and the derivation tracks the regulation.
v1; no errata. Demonstrate a key error and the correction is published here, credited — challenge policy.