Topic Archive: In-Service Distributions

Can Employees from a Former Subsidiary Take a Distribution from our 401k Plan?

DWC | 03/12/19

Facts

Our company has several wholly-owned subsidiaries, and each of them has signed onto our 401(k) plan as participating employers.  We sold 100% of the stock of one of those subsidiaries – Glen’s Fiddich, LLC – to an unrelated company.  As a result of the sale, Glen’s Fiddich is no longer related to us and has discontinued participation in our retirement plan as of January 1, 2019. The employees of Glen’s Fiddich are now participating in the purchasing entity’s retirement plan, and a few of them are eager to roll their accounts from our plan into the new plan.

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Can a Participant Get a Jump on RMDs & Start Taking Them a Few Months Early?

DWC | 11/6/18

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.

Facts

One of the non-owner participants in our 401(k) plan will be turning 72 in April of 2021.  The participant knows her first RMD is due no later than April 1, 2022, but she has asked whether she has to wait that long to actually withdraw the money. 

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Can In-Service Distributions be Taken Prior to Age 59 1/2?

DWC | 10/23/18

Facts

One of the participants in our 401(k) plan heard from a friend that it is possible to take money out of a plan while still employed.  I’ve always heard that age 59 ½ is the rule of thumb as to when in-service distributions are allowed, but this participant is only in her mid-40s.  She has about $100,000 in the plan: $65,000 in employee deferrals, $25,000 in safe harbor matching contributions, and $10,000 in profit sharing.

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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.

Facts

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.

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