Notification of RMD Dollar amount from 401k plan
My 40ik plan administrator DID NOT send me a written notice advising what my RMD would be for 2008. They had provided it the last few years. I called and they said I need to call them to get the RMD since they WILL NOT be sending written RMD’s to plan participants. My Mutual Fund compnay has sent this info to me every year since I turned 701/2.
Does the IRS regulating 401K plans require the administrator to send written notification of RMD?
Permalink Submitted by Alan Spross on Tue, 2008-02-26 20:50
No. The formal notification requirements apply to IRAs of all types, but not to other plans.
This does not mean that employer plans do not have responsibility to see that RMDs are issued, because that is part of retaining plan qualification in Code Sec 401(a). However, HOW they do that is up to the plan. The following is pasted from the employee plan corrective procedures under IRS Rev Procedure 2006-27:
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.06 Failure to timely pay the minimum distribution required under § 401(a)(9). In a defined contribution plan, the permitted correction method is to distribute the required minimum distributions. The amount to be distributed for each year in which the failure occurred should be determined by dividing the adjusted account balance on the applicable valuation date by the applicable distribution period. For this purpose, adjusted account balance means the actual account balance, determined in accordance with § 1.401(a)(9)-5 Q&A-3 of the regulations, reduced by the amount of the total missed minimum distributions for prior years. In a defined benefit plan, the permitted correction method is to distribute the required minimum distributions, plus an interest payment representing the loss of use of such amounts.
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Accordingly, you might expect that some plans have opted to send out an RMD notice to affected employees, but not sure what % of them do.