We have a few employees past age 70.5 who are receiving annual distribution of their RMD with no withholding being taken. All of these employees were set up on the distribution payout in the 94 and 95 years. It is our understanding if the payout started prior to '96/'97 years, we're ok not withholding. All distributions are based on life expectancy, recaluation basis. Are we ok on these payouts because they start so long ago, or should we start withholding?

Start to give them the option of having amounts withheld, you mean?

I don't think these payments could be rolled over, so the mandatory 20% withholding rules wouldn't apply but the optional withholding rules applicable to "periodic" payments probably would. But an individual can opt out of that type of withholding for no reason at all -- the IRS just wants to make sure the plan gives the payee that option so that the payee isn't short on cash come next April 15.