401K and company owner RMD

Hello,
Can anyone answer this question.-really 2 questions. Client owns a company that provides a 401K plan. I believe the company is a C-corp. She recieves a W-2 salary and is over 70 1/2 and still working. Is it true that she would be able delay the 401K RMD while working, except that since she is more than 5% owner of the company providing the 401K, she cannot delay the RMD? Thank you is advance for your answer.

DR



Yes, that is correct. A 5% or greater owner of the sponsoring company must start RMDs at 70.5 or the usual required beginning date shortly thereafter.

Before she considers reducing her ownership share below 5%, she would also have to be sure the plan does not require ALL employees to start RMDs at 70.5. Plans are allowed to require this even though IRS rules allow deferring RMDs until retirement for less than 5% owners. Most plans conform to the IRS rules on this issue, but not all.



Thank you alan-Oniras for your answer and the additonal clarification.

DR



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