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IRS Issues Guidance on Failure to Meet Required Minimum Distribution Standards for 403(b) Plans

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On February 23, 2018, the IRS issued a memorandum to employee plan examiners that directs them to not challenge 403(b) plans for failing to satisfy the required minimum distribution standards under IRC § 403(b)(10) if the plan cannot locate the participant and has taken the following steps:

  • Has searched plan records and related plan, sponsor, and publicly available records or directories for alternative contact information;
  • Has used any of the following search methods: a commercial locator service, a credit reporting agency, or a proprietary Internet search tool for locating individuals; and
  • Has attempted contact via United States Postal Service (USPS) certified mail to the last known mailing address and through appropriate means for any other address or contact information (including email addresses and telephone numbers).

If the plan has not completed all of these steps, employee plan examiners may challenge a 403(b) plan for failing to commence or make a distribution to a participant or beneficiary to whom a payment is due.

These rules are effective as of February 23, 2018.

Ted Batson

Ted serves as partner, tax counsel, and Professional Practice Leader – Tax. As a certified public accountant and tax counsel, Ted advises exempt organizations of all sizes on a wide range of issues. This includes consulting on tax and employee benefit related matters, representation before state and federal tax authorities, and assistance with firm audit or advisory engagements to formulate advice and counsel on important operating and tax issues. Ted also leads the firm’s tax preparation practice, including IRS Forms 990 and 990-T and related state forms.

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