A client who is well over the age of 70 1/2 and retired has not been taking distributions from the Kodak 401(k) Plan -- otherwise known as the Kodak SIP. Does anyone know if the Kodak plan is exempt from the RMD rules?

If you are talking about the EASTMAN KODAK EMPLOYEES SAVINGS AND INVESTMENT PLAN, it appears to be a qualified plan (based on the 5500 filing). I know of no reason why it should be exempt. Is there some reason why you think it might be?

At first I thought the participant might have forgotten to take a distribution. Then someone reminded me that another client (also over 70 1/2 and retired) was told that he didn't have to take a distribution, but nobody can remember why.

Perhaps the participant is not a 5 percent owner?

But in both instances, katieinny indicates that the participant is retired as well as over 70-1/2.

Possibly retired before 70-1/2 (but after the change in those rules) and thought he could defer as long as he wanted? Ultimately, the reason does not matter, since the important issue is to follow the terms of the document.

It is possible that he executed a "242(b) election" during the latter weeks of 1982 if my memory works. Such an election could have grandfathered a later start date of his choosing (back then). People used to elect start dates of age 90 for example. You could revoke such election, but then you were subject to the new rules.

(I cannot be old enough to remember this-it must have been in my last life that I saw boxes of these elections).

katienny, I recommend that you determine if he was a participant in 1982 or 1983. If not, you can rule this out.

AndyH seems to have the best guess. TEFRA 242(b) elections were all the rage in late 1983. The main requirement is that you needed to satisfy the then-existing incidental benefit rule. This means that your election must have been for a form of payment that would have resulted in at least 50% of your account balance being paid out over your life expectancy. Many elections called for 100% lump sums at age 75, etc. The Kodak folks must have reviewed the elections (if we are talking about a 242(b) election) and decided it was o.k. Otherwise they would risk disqualifying the plan by deferring benefits beyond 70.5.

Thank you for reminding me about the 242(b) election. The client is at about the right age for that to have occurred, so I will check it out.