The 5% Owner RMD Trap: Why Your "Still Working" Exception Just Vaporized скачать в хорошем качестве

The 5% Owner RMD Trap: Why Your "Still Working" Exception Just Vaporized

We are performing a forensic deconstruction of the 5% Owner RMD Trap—a lethal compliance hurdle for business owners that permanently disables the "still working" exception under IRC § 401(a)(9). While most employees can delay 401(k) distributions until actual retirement, business owners face a statutory mandate that overrides this benefit, triggering mandatory distributions regardless of employment status. As The Finance Observer, I analyze the mechanical "Trap" of IRC § 401(a)(9)(C)(ii)(I), which creates an immutable carve-out for anyone owning more than 5% of the enterprise. We break down the Constructive Ownership Rules of IRC § 318, revealing how family attribution (spouses, children, grandchildren, and parents) can inadvertently push you over the threshold. We audit the Determination Year—the single, one-time permanent test—and deconstruct the 25% excise tax penalty for "Excess Accumulation" failures under IRC § 4974. FORENSIC BREAKDOWN: [00:13] The "Still Working" Fallacy: Why owners cannot rely on standard employee deferral rules. [01:04] IRC § 401(a)(9)(C): Deconstructing the statutory foundation of the deferral exception. [02:13] The 5% Carve-Out: Analyzing the "Exception to the Exception" that mandates distributions. [03:03] Technical Definition: Why owning exactly 5.0% preserves your ability to delay RMDs. [03:59] Attribution Rules (IRC § 318): Mapping how family stock ownership is legally consolidated. [04:33] The Determination Year: Identifying the one-time permanent window that locks in your status. [05:14] Irrevocable Status: Why selling shares after the determination year fails to clear the trap. [05:36] Divestment Strategy: The December 31st deadline for clearing the 5% ownership threshold. [06:05] Operational Consequences: Analyzing the 25% personal excise tax and plan disqualification risks. THE LAW (Citations): IRC § 401(a)(9)(C): Required distributions; deferral for employees. IRC § 401(a)(9)(C)(ii)(I): The 5% owner exclusion mandate. IRC § 416: Definition of a 5% owner (Top-heavy plan rules). IRC § 318: Constructive ownership of stock (Attribution rules). IRC § 4974: Excise tax on accumulation in qualified retirement plans. DISCLAIMER: I am The Finance Observer. This content is for educational purposes only. I am not a CPA, Attorney, or Enrolled Agent. This video breaks down Federal Tax Law and IRC regulations for informational purposes. RMD compliance for business owners involves complex attribution and timing rules. Always consult a qualified tax professional before restructuring ownership or delaying distributions.