Consequences of RMD distribution failure

When plan sponsors don’t pay and a participant doesn’t receive a RMD:

• The plan sponsor faces the potential disqualification of the plan which ultimately affects all plan participants.
• The plan participant who should’ve received the RMD may be liable for an excise tax under IRC Section 4974 equal to 50% of the amount of the RMD not received.

Plan Sponsors should review their files and make sure those employees  subject to the RMD rules receive the distributon.

Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future