A non-5% owner may defer (assuming document allows) age 70 1/2 distributions until after retirement. What if a full-time salaried employee reduces down to 5 hours per week? How about 1 hour per month? At what point is the person considered retired or separated from service?

I couldn't find anything in the plethora of IRS Notices released back in 1996 and 97. Did I miss something?

I've also found this to be troublesome. There are old, still relevant, IRS rulings which distinguish between separation of service and break-in-service. I am of the belief that until you actually perform no more services for the employer you have not "retired" or "terminated. This belief stems from those old rulings. As long as your employee works "parttime", he/she has not separated from service (and not retired). I think you will find this stuff under the old "lump sum" distribution rules.

Well, the plan should state when commencement is or isn't. For example, it might state that no payment will be made until the participant actually severs employment (with exception for 70-1/2 requirement, of course).

We also know that a plan can permit commencement without regard to separation of service if the EE has reached NRA. I wonder if the plan could be amended to permit distribution if the EE has reached age 74 (for example) instead of NRA. Would this work?