Yes they are, but there are certain governing rules.
Each plan participant must receive his or her benefits (or start to receive periodic distributions of benefits) by the required beginning date. The participant would begin to receive distributions from the plan by April 1st of the first year after the later of the following:
- The calendar year in which he or she reaches the age of 70½; or
- The calendar year in which he or she retires from the company.
Depending on the plan documents, the participant may be required to start receiving distributions by April 1st of the year after the participant reaches age 70½ even if he or she has not retired from the company.
However, the rules for a participant who is a 5% owner of the employer maintaining the plan are a little different. The participant would be required to begin receiving distributions by April 1st of the first year after the calendar year in which the participant reaches the age of 70½.