Missed RMDs

Submitted by Todd Kirsch on Fri, 2023-11-10 18:58

We recently took on a new client who is 77 years old and still runs his own small business and has a solo 401k plan. He is the sole owner. I realized that he has not taken RMDs from his 401k. It appears that he should have taken them as far back as 2017 when he turned 70 and 1/2. This seems messy on withdrawing past RMDs. Any guidance on how to handle/calculate them would be greatly appreciated. Thank you.



Submitted by Alan - IRA critic on Sat, 2023-11-11 02:14

  • The calculation is the easy part, but the prior year end balance must be determined to complete the calculation, as the make up of the missed RMDs is the clear corrective solution. The other two issues are less clear, and Secure 2.0 seems to allow the client to use the EPCRS voluntary correction program (VCP) to clear the plan of these continued violations. And getting the penalty waived by the IRS is also a challenge. See the following copied from Rev Proc. 2021-30:
  • “(2) Section 4974. As part of VCP and Audit CAP, if a failure involves the failure to satisfy the minimum required distribution requirements of § 401(a)(9), in appropriate cases, the IRS will waive the excise tax under § 4974 applicable to plan participants or beneficiaries. The waiver will be included in the compliance statement or in the closing agreement in the case of Audit CAP. Under VCP, the Plan Sponsor, as part of the submission, must request the waiver and, in cases where the participant subject to the excise tax is either an owner-employee as defined in § 401(c)(3) or a 10 percent owner of a corporation, the Plan Sponsor must also provide an explanation supporting the request. Under Audit CAP, the Plan Sponsor must make a specific request for waiver of the excise tax under § 4974. The Plan Sponsor should also provide an explanation supporting the request for a waiver. Upon reviewing the request, the reasons for the failure, and other facts or circumstances of the case under examination, the IRS will determine whether it is appropriate to approve the waiver of the excise tax as part of the closing agreement negotiated under Audit CAP.”
  • A consultant may need to be retained to clear this violation with the IRS, as this is totally different from an IRA missed RMD. Good thing these omissions were discovered before an IRS audit of the plan.


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