We are exploring a strategy for a small-business owner of a corporation with a SIMPLE IRA who now must take, and pay tax on, a Required Minimum Distribution, to stop having to take distributions. The plan would be to 1) divest enough shares so that he is a less than 5% owner, 2) close the SIMPLE, 3) open a 401(k), and 4) rollover the SIMPLE to the 401(k). Given that the client has already begun taking his RMD, is there a problem with this approach?
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Strategy for working 70+ owner with a SIMPLE IRA
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 iweisman |
Strategy for working 70+ owner with a SIMPLE IRA |
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Posts: 1 (06/11/08 12:21:02) |
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DCK101 |
Working 70+ owner with a SIMPLE IRA | ||
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Posts: 395 (06/11/08 15:13:14) Elite Member |
I believe you cannot have a SIMPLE plan and a 401(k) plan in the same calendar year. So the 401(k) cannot be started until 2009. Therefore he'll be on the
hook for two more distributions (one for 2008 and one in 2009 when the SIMPLE account is rolled to the 401(k)). Other than that, I don't see a problem.
How will the stock be "divested"? If it stays in the family or is put in a trust, the stock might still be attributed to him. |
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iweisman |
Thanks for your help | ||
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Posts: 2 (06/13/08 12:14:48) |
The shares probably will be gifted to the owner's son, who works full-time in the business and already owns 82% of the shares. I'll have to do some
research about whether the son's shares would be attributed to his dad.
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