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Employee Benefit Services

The Consequences of Missing a Required Distribution

When a business owner reaches age 70.5 (or an employee retires at a later age and deferred distributions are allowed by the plan document), minimum distributions from a qualified plan must commence by the end of that year. The initial distribution can be delayed to the next April 1, but distributions must be made by December 31 of each subsequent year. The Internal Revenue Code imposes a substantial 50% excise tax penalty on a plan participant who misses this deadline. The following article details the fixes for any missed required minimum distributions (RMDs).

Read: Required Minimum Distribution: Don’t Miss It!

 

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