How Retirement Plans Can Correct Required Minimum Distribution Errors

Summary

When an error in administering required minimum distributions (RMDs) from defined benefit (DB) or defined contribution (DC) plans violates Internal Revenue Code (IRC) Section 401(a)(9) requirements, plan sponsors may be able to fix the problem by making corrective distributions under IRS procedures. This article outlines the solutions available when qualified or 403(b) plans miss or miscalculate RMDs. The coverage includes streamlined procedures for plans applying for IRS approval of a proposed correction, and options for requesting a waiver of participants' excise taxes. Related tax reporting and withholding rules also are addressed.