RMD from a company profit sharing account
I am trying to work with one person who has a profit sharing plan with 2 other people in his company. He turned 70 1/2 years old last year and his boss who is part of that account is 2 years older than him not sure about the 3rd person. He was told by his advisor that he did not need to take out his RMD because he is still working – nominally on the paper. Ed said that in order to apply “still working exceptions”, the person could not own more than 5% of the company. The boss has about $1.2 mil and this person has $400k and the 3rd person has $400k in this account and the company is in a corporation. Does this “still working exception” apply to these people? How do I find the accurate information?
Permalink Submitted by Alan - IRA critic on Wed, 2019-01-16 19:25
Balance in the plan does not matter, but stock ownership does. Did this person own MORE THAN 5% of the shares last year? If so, then 2018 is his first RMD distribution year, and that RMD must be distributed by 4/1/2019. Another factor is the family attribution rules, which could make him a greater than 5% owner even if he is not, but any of the other 2 are certain family members whose ownership must be attributed to him.