Skipping the 401(k) RMD Without Penalty For Those Continuing to Work After Age 70

More than ever, workers are continuing to work into their 70s and beyond.  The general rules governing retirement accounts require nearly every individual account owner to begin taking Required Minimum Distributions (RMDs) by April 1 of the year following the year in which the owner turns 70½.  There exists a notable exception for employer-sponsored 401(k) accounts owned by employees who continue working past age 70½.

If the plan allows, an owner who leaves funds in the 401(k) can avoid RMDs if s/he remains employed with the employer who sponsors the plan.  Moreover, the owner can also continue to make contributions to the 401(k)! 

This exception has some significant requirements, though.  The current employer must sponsor the 401(k);  an owner cannot change employers and defer RMDs beyond age 70½.  In other words, if a former employer sponsors the relevant 401(k), the owner must take RMDs even if continuing to work for another employer that also sponsors a 401(k).  If the owner has more than one 401(k) and the plans allow for rollovers, however, it may be possible to roll all 401(k) funds into the 401(k) of a current employer and delay RMDs on all of the funds if the still working exception applies. Combining accounts will also simplify RMD planning once the owner stops working, because the RMD on each account would have to be determined separately.

The plan, too, must permit the exception.  Because not all 401(k) plans permit the exception, even though permitted by law, an account owner must ensure that his/her plan actually does allow the funds to remain in the plan to avoid a steep 50 percent penalty that apply to missed RMDs.

The exception does not apply if the plan is an IRA (whether a traditional, SEP or SIMPLE IRA).  As an aside, remember that RMDs do not apply to Roth IRAs during the original account owner's lifetime.   

Despite these carefully prescribed and limited conditions, the last condition, that the owner continues to work for the employer, is without a concrete definition, and therefore, may permit flexibility.  Because the IRS does not provide a provides a concrete definition of what it means to continue working past age 70½, it may be possible for an owner to continue working on a reduced-hours or consulting basis and still defer his or her RMDs past the traditional required beginning date.Of course, if special arrangements are crafted by an employer and employee, it is advisable to consult an attorney to document the special relationship in order to ensure that it won't be deemed a sham or fraudulent  arrangement by the IRS.

While an account owner may generally avoid taking RMDs from his or her 401(k) as long as s/he continues working past age 70½, many small business owners are not permitted to take advantage of this exception, because the exception does not apply to participants who are five percent owners of the business sponsoring the retirement plan.  Plan participants  who own a portion of the business sponsoring the 401(k) must also be aware of the constructive ownership rules that apply when determining whether s/he is a five percent owner; interests held by certain members of the owner's family (e.g., spouse, children, parents, etc.) and by certain entities which the owner controls  will be added to the ownership interest of the participant/business owner in determining whether the 5 percent threshold has been crossed.

The above article is based upon an article  published by ThinkAdvisor, which in turn was drawn from Tax Facts Online, and originally published by The National Underwriter Company, a Division of ALM Media, LLC, as well as a sister division of ThinkAdvisor. 

Nursing Home Complaints Rose by 33% over Four Years

From McKnight's Long Term Care News: complaints filed against nursing homes between and including the years 2011 and 2015 were up by a third, according to a federal report. 

In 2011, there were 47,279 complaints, which had risen to 62,790 by 2015, notes the new report from the Office of Inspector General Report from the Department of Health and Human Services.  More than half were prioritized as high priority or resulting in immediate jeopardy, triggering  onsite investigations within 10 working days. A third of complaints were substantiated, according to the OIG.

The increase in complaints may not reflect declining care quality, authors suggested, but instead, may reflect better options for filing and  tracking the reports.  For those concerned with care quality, however, the increase in complaints suggests that, even if care quality is not decreasing, care quality remains a significant challenge.  More than half of complaints related to quality of care/treatment or resident/patient/client neglect. Examples given included a lack of blood glucose strips for a patient with high blood sugar who was later found deceased, and a resident who called for assistance after a bowel movement and wasn't helped until three and a half hours later.

The summary of the Report reads:

"State survey agencies must conduct onsite investigations within certain timeframes for the two most serious levels of complaints-those that allege serious injury or harm to a nursing home resident and require a rapid response to address the complaint and ensure residents' safety. However, previous reports by OIG and the Government Accountability Office found that States did not conduct onsite investigations within the required timeframes for some of these complaints.

Each year, half of all nursing home complaints were at the level of seriousness that requires a prompt onsite investigation, and the most common allegations among these related to quality of care or treatment. During the period we reviewed, States conducted nearly all the required onsite investigations. Although almost all States conducted most of their onsite investigations within required timeframes, a few States fell short. Furthermore, almost one-quarter of States did not meet CMS's annual performance threshold for timely investigations of high priority complaints in all 5 years. Lastly, States substantiated (i.e., verified with evidence) almost one third of the most serious nursing home complaints.

Tennessee accounted for most of the immediate jeopardy complaints in the five-year period, the report says. Additionally, Tennessee, Arizona, Maryland and New York accounted for almost half of the high priority complaints not investigated onsite within 10 working days.

To read the Report, click here.  To read the OIG's summary and explanation of the Report, click here.

To learn how your estate plan might facilitate "Aging in Place," click here. 

Aging in Place: Use of Inappropriate Psychotropic Medications More Likely in SNFs with Over-Worked Staffs

New evidence suggests a link between overwork staffs in nursing facilities and the inappropriate use of psychotropic and antiphsychotic medications. Dutch researchers recently reported the results of a new study designed to identify possible patient and non-patient causes behind prescribing psychotropic drugs. The study included a sample of nearly 350 nursing home residents with a psychotropic drug prescription and dementia, according to an article published in McKnight's Long-Term Care News.  

The findings, published in International Psychogeriatrics, showed that the more patients and years of experience a physician had, as well as the higher the nursing staff's workload, the more likely the patient was to receive inappropriate psychotropic drug prescriptions.  Less appropriate prescriptions were also identified when residents had more severe anxiety, a diagnosis of dementia other than Alzheimer's, and more time spent with a physician.

Older residents and those with more severe aggression, depression and agitation were more likely to receive appropriate psychotropic prescriptions. 

The link between more pronounced symptoms and more appropriate prescribing “implies that physicians should pay more attention to the appropriateness” of prescriptions when symptoms are less obvious, the researchers said. The researchers also acknowledged that some of their findings may seem counterintuitive, and require more research before concrete recommendations are made.

Of course, this new evidence only supports the argument for planning to "Age In Place." For more information regarding Aging in Place planning, and the use of an Aging in Place suitable estate plan, go here.  

For more regarding negative health outcomes of the use of such medications in skilled nursing facilities, see Antipsychotics and Psychotropic Drugs Increase Fall Risks in Nursing Homes.

Post-Irma Death Toll at Florida SNF at 9 as Provider Sues State Over Medicaid Ban

McKnight's Long Term Care News reports: 

The death toll from the Florida skilled nursing facility that lost its air conditioning following Hurricane Irma rose to nine residents on Tuesday, as the provider geared up for a legal battle with state officials over its loss of Medicaid funding.

Carlos Canal, 93, is the ninth resident from The Rehabilitation Center at Hollywood Hills whose death officials have blamed on the soaring temperatures inside the Hollywood, FL facility after the air conditioning went out. Canal died of pneumonia with a 105 degree fever, his daughter told the Miami Herald.

This week also brought continued vitriol between The Rehabilitation Center and Florida Governor Rick Scott's (R) administration.The provider filed a lawsuit late Tuesday requesting an injunction against the state's orders to cut Medicaid funding from the facility, claiming the abrupt funding cut and admissions moratorium violated its due process, according to a news service report.

“With the stroke of a pen, [the Agency for Health Care Administration] has effectively shut down Hollywood Hills as a nursing home provider in Broward County,” the suit reads. “These illegal and improper administrative orders took effect immediately and without any opportunity for the facility to defend itself against unfounded allegations.”The lawsuit also argues that the facility followed its emergency preparedness plans while dealing with the air conditioning loss.

Scott disputed that claim in a statement issued Tuesday, saying the facility erred in not calling 911 sooner or evacuating residents to its partner hospital.“No amount of finger pointing by the Hollywood Hills Rehabilitation Facility … will hide the fact that this healthcare facility failed to do their basic duty to protect life,” Scott said. “Through the investigation, we need to understand why the facility made the decision to put patients in danger, whether they were adequately staffed, where they placed cooling devices and how often they checked in on their patients.”

Aging in Place- Male Family Caregivers are Breaking Stereotypes

There are 40 million family caregivers in the United States helping with everyday activities and personal tasks ranging from bathing, dressing, wound care and medication management to transportation and finance.  The “typical” family caregiver is a 49-year old woman who takes care of a relative.  Men are not traditionally seen as caregivers.

A recent AARP Public Policy Institute  report suggests the the tradition is changing; men are increasingly filling care giving roles.  The report, Caregiving in the U.S., found that men represent 40 percent of all family caregivers.  That means that 6 million males serve as family caregivers.

Jean Accius, a Ph.D. with the AARP Public Policy Institute has penned an article explaining the ramifications gleaned from the pertinent data:

"These husbands, brothers, sons, sons-in-law, partners, friends, and neighbors are joining—either by choice, obligation, or necessity—the army of family caregivers providing care across the country. Male family caregivers are performing medical and nursing tasks as well as a range of personal care activities." 

In many cases, male family caregivers are caring for a spouse or partner. The PPI report shows that spousal caregivers in general face unique challenges, in part because they may lack an adequate support network.

There were notable differences, however, between males caring for a spouse and those caring for a parent.  Male caregivers, according to the report, provide more hours of care, and are more likely to be primary caregivers with little to no support from other family members, compared to male family caregivers taking care of a parent or other relative.

Men caring for a spouse reported having been a caregiver for a longer period of time than other unpaid male family caregivers (5.1 years compared to 3.9).

Dr. Accius reported:

"...the study found that male family caregivers were more likely (66 percent) to be working compared with female caregivers (55 percent). The large majority of employed male caregivers were working 40 or more hours per week at the time of caregiving. 

Regardless of gender, caregiving responsibilities often require family caregivers to make workplace accommodations. The study found that nearly two-thirds (62 percent) of male family caregivers had to make changes in the workplace as a result of their caregiving responsibilities [reference omitted].  Moreover, their caregiving duties affected their work in other significant ways:

• Nearly half (48 percent) of male family caregivers went in late, left early, or took time off to provide care.
• About 15 percent of male family caregivers took a leave of absence or went from working full time to part time to provide care.
• Less than 10 percent of male family caregivers turned down a promotion (8 percent), received a warning about their performance or attendance (7 percent), or retired early or gave up working entirely (6 percent).
• Nearly two-thirds (62 percent) of male family caregivers indicated that their caregiving experience was moderately to very stressful.
• Almost half (46 percent) of male family caregivers experienced moderate to severe physical strain due to caregiving responsibilities.

Qualitative studies indicated that younger men had more “difficulties” in the caregiving role and communicated particular “psychological stress” when having to choose between work responsibilities and caregiving responsibilities. [reference omitted].  More than one-third (37 percent) of male family caregivers did not inform their employers about their caregiving responsibilities. The percentage of male family caregivers who did not inform their supervisors was even higher for millennials (45 percent).

Despite this trend, though, considering the aging of the population, increases in life expectancy, and shrinking families, the supply of family caregivers is unlikely to keep pace with future demand.  Aging in place planning, therefore, is extremely important.  The planning shoul consider the unavailability of typical caregivers, and should consider the unavailability of family caregivers.