IRS to EP Examiners: Don’t Challenge RMD Failures Under Certain Circumstances

Thomas Petit, Acting Director of Employee Plans Examinations for the IRS Tax Exempt and Government Entities Division, has instructed EP examiners to not challenge a qualified plan for failing to satisfy the required minimum distribution (RMD) standards under certain circumstances. Petit gave the instructions in a memorandum issued on Oct. 19.

The memo tells EP examiners that for purposes of Internal Revenue Code Section 401(a)(9), they are not to challenge a qualified plan for violating the RMD standards if it failed to commence or make a distribution to a participant or beneficiary to whom a payment is due, if the plan has taken the following steps:

• searched plan and related plan, sponsor and publicly available records or directories for alternative contact information;

• searched for contact information methods by using a commercial locator service, a credit reporting agency or a proprietary internet search tool for locating inividuals; and

• attempted contact via U.S. Postal Service certified mail to the last known mailing address and through appropriate means for any address or contact information (including email addresses and telephone numbers).

However, the memo says, if a plan has not completed these steps, EP examiners may challenge a qualified plan for violating the RMD standards by failing to commence or make a distribution to a participant or beneficiary to whom a payment is due.

This memo applies to all exams that are currently open and those that will be opened in the future.