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Can a Company Owner Withdraw More than the Required Minimum Distribution After Age 70 1/2?

DWC 09/5/17

This QOTW has been updated to reflect changes made by the SECURE Act, which was signed into law on December 20, 2019.

Participants who were born on or before July 1, 1949, are required to start taking their RMDs in the year they turn 70 ½. Those born after that date are subject to RMDs on reaching age 72.


One of the owners of our company is 75 years old. She remains actively employed by the company and does not show any signs of cutting back or quitting any time soon. She has accumulated a significant account balance in the 401(k) plan and has been taking her required minimum distributions (RMDs) each year since she reached the RMD age requirement.


Can she take a withdrawal from the plan that exceeds the amount of her RMD or is she limited to just that minimum amount each year until she terminates employment?


Your plan must permit in-service distributions in order for this actively employed owner to take out more than just the RMD amount. If so, she would take her RMD each year for the required amount and then take an in-service distribution for any additional amounts.

Keep in mind that the withholding and rollover rules are different for these two payment types. The RMD cannot be rolled over and is subject to 10% federal tax withholding at the time of distribution; however, the participant can elect a higher or lower withholding rate. The in-service distribution portion can be rolled over and is, therefore, subject to mandatory 20% tax withholding at the time of payment if not rolled over.

If the plan does not permit in-service distributions, then she is stuck just taking the RMD. Of course, you can always amend your plan to add an in-service distribution provision.

For more information on required minimum distributions and in-service distributions, please visit our Knowledge Center here and here.

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Topics: Question of the Week (QOTW), DWC, Required Minimum Distribution (RMD), In-Service Distributions, Plan Distributions


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The views expressed in this blog are those of the authors and do not necessarily represent the views of any other person or organization. All content is provided for informational purposes only and is not intended to be tax or legal advice.