Managing Missing Plan Participants: Avoiding the Pitfalls of RMDs for 401(k), 403(b), and Other Qualified Plans

Tax Penalties, Maintaining Qualified Status, Addressing ERISA Fiduciary Issues, Formulating Search Procedures

Note: CPE credit is not offered on this program

A live 90-minute premium CLE webinar with interactive Q&A


Wednesday, October 7, 2020 (in 11 days)

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

or call 1-800-926-7926

This CLE webinar will guide ERISA counsel and employee benefits advisers on leveraging the provisions on required minimum distributions (RMDs) to missing participants of 401(k), 403(b), and other qualified plans. The panel will outline the RMD rules for qualified plans, discuss how to avoid the excise tax and penalties, maintain qualified status, handle IRS and DOL challenges, and address fiduciary issues under ERISA.

Description

The IRS issued an internal memorandum to address when IRS examiners should pursue potential penalties for failure to make RMDs to missing participants in qualified plans. In the event of an IRS audit or DOL investigation, counsel and plan administrators must adhere to requirements and procedures to avoid penalties for failing to make RMDs to missing participants.

IRS examiners are directed to not challenge the qualified status of a plan for violation of RMD requirements under Section 401(a)(9) for failure to commence or make a distribution to a missing participant to whom a payment is due, so long as the plan has taken steps to locate the missing participant consistent with methods specifically outlined in the memorandum. If such methods are not taken, the IRS may challenge the plan and assess penalties.

On the heels of the IRS issuing guidance on missing plan participants, the Pension Benefit Guaranty Corporation (PBGC) issued final regulations expanding its current program to include terminating defined contribution plans and terminating small professional service defined benefit plans with 25 or fewer participants. The regulations provide terminating plans with the option to transfer missing participant benefits to the PBGC rather than establishing an IRA if certain requirements have been met.

The IRS memorandum and subsequent guidance serves as a roadmap for plan fiduciaries to avoid penalties and excise taxes. Counsel and employee benefits advisers must formulate effective missing participant procedures in accord with the provided IRS guidance.

Listen as our panel examines current RMD rules, IRS guidance and procedures regarding missing plan participants, and offers techniques to ensure compliance to avoid penalties.

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Outline

  1. RMD requirements under the Internal Revenue Code
  2. Implications of failing to issue RMDs; penalties and excise tax
  3. IRS guidance on RMD and missing plan participants
  4. PGBC final rule on missing participants and transfer of benefits of terminating plans
  5. Fiduciary duties under ERISA
  6. Best practices in formulating missing plan participant search procedures and avoiding penalties

Benefits

The panel will review these and other key issues:

  • RMD requirements under the Internal Revenue Code
  • Excise tax and other related penalties for failure to issue RMD
  • Formulating effective missing plan participant search programs
  • IRS guidance on missing plan participants and avoiding penalties
  • Fiduciary duties under ERISA for missing plan participants
  • Best practices for implementing effective missing participant programs

Faculty

Flores, Steve
Steve Flores

Partner
Winston & Strawn

Mr. Flores provides sophisticated, but practical advice to employers, corporate legal departments, plan fiduciaries,...  |  Read More

O’Brien, Maureen
Maureen O'Brien

Partner
McDermott Will & Emery

Ms. O'Brien advises clients on a broad range of employee benefits matters, including qualified plan design,...  |  Read More

Rosenbaum, Ary
Ary Rosenbaum

Attorney
The Rosenbaum Law Firm

Mr. Rosenbaum is an ERISA/ retirement plan attorney for his firm,

 |  Read More

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