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RMD needs election form?


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Hi,

The owner (active) of a corp took his RMD from his Profit Sharing Plan (his prior year end assets divided by age factor). Since this is an RMD, and he is not electing a benefit etc,  is an executed distribution election form  not required? Thank you.

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An RMD can be distributed without the participant's consent. However the participant must be given the opportunity to waive the 10% federal income tax withholding.

As a matter of prudence, the plan administrator might want to get the participant to complete a form, if only to ensure that the payment information is correct. If the participant in question is the plan administrator, then this step  might be redundant.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

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If there was no withholding, I'd want something in writing, just to chronicle it.

Good thing is if it's a W-4P, then I believe the election is good until revoked.  With W-4P "equivalents" I'm not sure if that election carries forward.

And, if the RMD is distributed without the participant's consent, then, IMHO, the 10% MUST be withheld.

QKA, QPA, CPC, ERPA

Two wrongs don't make a right, but three rights make a left.

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Thank you very much BG5150, CUSEFAN, and C.B. Zeller. In this case, the administrator (owner and wife) took the RMDs, and therefore, an election form should not be required based on the above. What if an agent (audit)  is asking for executed distribution election forms for these RMDs?

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Point them to the section of the plan document that says distributions will commence by the participant's required beginning date, even without the participant's consent.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

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