Employers: Need to Know Information About Employer Responsibilities Regarding Participant RMDs, Oct. 10, 2019

Most employers who sponsor traditional retirement plans may initially tend to believe that required minimum distributions (RMDs) are a compliance issue solely for plan participants. However, employers that sponsor 401(k) plans are required to know when and to whom RMDs must be paid. Failure to correctly pay and calculate RMDs can result in an operational failure that can cause the 401(k) to become disqualified. Importantly, the plan document itself is required to include certain IRC RMD rules and those rules must control over any inconsistent terms in the plan document itself. Failure to comply with this requirement can cause a plan document failure that can also cause the plan to lose its status as a qualified plan. For more information on the RMD rules for qualified plans, visit Tax Facts Online.