While it’s true that you can delay RMDs if you continue to work…if, as an employee, you own more than 5% of the company sponsoring the 401k plan, then you must take your RMDs on schedule.

Resultantly, because you are both owner and employee, you must take your RMDs starting at age 70.5.

It’s very important that you take your RMD payment from your Solo 401k plan. Failure to receive an RMD (or receiving too little of a payment) can result in a 50% excise tax on the amount you were supposed to distribute.

RMDs are taxed as ordinary income at your regular income tax rate. By the time you reach age 70.5, you’ll probably have less income coming in so you’re usually taxed at a lower rate.

Did this answer your question?