Managing Missing Plan Participants: New IRS Guidance on RMDs for 401(k), 403(b) and Other Qualified Plans

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

New IRS RMD Guidance: ERISA Fiduciary Issues & Missing Participants

Recording of a 90-minute CLE webinar with Q&A


Conducted on Tuesday, May 15, 2018

Recorded event now available

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Program Materials

This CLE webinar will guide ERISA counsel and employee benefits advisers on leveraging the provisions of the new IRS guidance on required minimum distributions to missing participants of 401(k), 403(b) and other qualified plans. The panel will outline the required minimum distribution (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 recently issued an internal memorandum to address when IRS examiners should pursue potential penalties for failure to make RMD 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 outlined in the IRS memo to avoid penalties for failing to make RMDs to missing participants.

IRS examiners are now directed not to 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, effective on or after Jan. 1, 2018. The new 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 is 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, the IRS guidance memorandum on 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. New 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
  • New 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

Gardner, Felicia
Felicia M. Gardner

Partner
McGuireWoods

Ms. Gardner focuses on tax and employee benefits matters. She advises employers on the legal aspects of employee...  |  Read More

Gower, Robert
Robert R. Gower

Director
Trucker Huss

Mr. Gower concentrates his practice in all aspects of tax-qualified retirement plan design, compliance, and...  |  Read More

Spater, Benjamin
Benjamin F. Spater

Director
Trucker Huss

Mr. Spater concentrates his practice on the design and tax-qualification of retirement plans including pension, profit...  |  Read More

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