Editing 401(k) (section)

===Required minimum distributions (RMD)===
{{Main|Required minimum distribution}}
Account owners must begin making distributions from their accounts by April 1 of the calendar year after turning age {{frac|70|1|2}} (72 for individuals who turn age {{frac|70|1|2}} after December 31, 2019)<ref>"[https://congress.gov/116/bills/hr1865/BILLS-116hr1865enr.pdf Consolidated Appropriations Act, 2020: Section 114]". ''United States Congress''. 20 December 2019.</ref> or April 1 of the calendar year after retiring, whichever is later.<ref>"[https://www.law.cornell.edu/uscode/text/26/401#a IRC Section 401(a)(9)(C)(i)(I)]". ''via Cornell University Law School''. Retrieved 16 December 2019.</ref> The amount of distributions is based on life expectancy according to the relevant factors from the appropriate IRS tables.<ref>"[https://www.irs.gov/publications/p590b#en_US_2017_publink1000230772 Publication 590: Individual Retirement Arrangements (IRAs), Additional Material]". ''Internal Revenue Service''.</ref>

The required minimum distribution is ''not'' required for a particular calendar year if the account owner is employed by the employer during the entire calendar year ''and'' the account owner does not own more than 5% of the employer's business at any point during the calendar year.{{efn|name=accountowner|For these purposes, a person's direct ownership must be added to the ownership by the person's spouse, children, grandchildren, or parents, or by the person's partnerships, estates, trusts, and other corporations.<ref>"[https://www.law.cornell.edu/uscode/text/26/318#a_2 IRC Section 318(a)(2)]". ''via Cornell University Law School''. Retrieved 16 December 2019.</ref><ref>Kitces, Michael (18 July 2018). "[https://www.kitces.com/blog/still-working-exception-delay-rmd-401k-required-beginning-date-5-percent-owner/ Maximizing The “Still-Working” Exception To Delay RMDs From A 401(k) Plan]". ''Kitces.com''. Retrieved 16 December 2019.</ref>}}<ref>"[https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds Retirement Plan and IRA Required Minimum Distributions FAQs (Search "actually retire")]". ''Internal Revenue Service''.</ref><ref>"[https://www.law.cornell.edu/uscode/text/26/401#a IRC Section 401(a)(9)(C)(i)(II)]". ''via Cornell University Law School''. Retrieved 16 December 2019.</ref> Required minimum distributions apply to both traditional contributions and Roth contributions to a 401(k) plan.

A person who is required to make a required minimum distribution, but does not do so, is subject to a penalty of 50% of the amount that should have been distributed.

In response to the [[Great Recession in the United States|United States economic crisis of 2007–2009]], [[United States Congress|Congress]] suspended the [[IRA Required Minimum Distributions|RMD]] requirement for 2009.<ref>"[https://www.irs.gov/pub/irs-drop/n-09-09.pdf Notice 2009-9]". ''Internal Revenue Service''. 2008.</ref><ref>"[https://www.congress.gov/110/plaws/publ458/PLAW-110publ458.pdf Worker, Retiree, and Employer Recovery Act of 2008: Section 201]". ''United States Congress''. December 23, 2008.</ref> It was suspended again in 2020 due to the [[COVID-19 pandemic in the United States|COVID-19 pandemic]].<ref>{{Cite web |title=IRS: Seniors, retirees not required to take distributions from retirement accounts this year under new law {{!}} Internal Revenue Service |url=https://www.irs.gov/newsroom/irs-seniors-retirees-not-required-to-take-distributions-from-retirement-accounts-this-year-under-new-law |access-date=20 March 2023 |website=www.irs.gov |language=en}}</ref>