Late RMDs: Is There a Notification Requirement?

[Übernerd]

If Plan Sponsor fails to make an RMD, must it notify Participant of Participant's excise tax liability? Or must Participant figure this out herself after she gets the 1099-R? If Plan Sponsor does have an obligation to inform Participant, where does this requirement originate--in the tax regs, or in ERISA's fiduciary rules? As I understand it, Participant must report the late RMD on Form 5329 and include the 50% tax; Participant may also include a request that the IRS waive the excise tax. Nothing in the Form 1099-R instructions, though, says that the sponsor has to characterize a distribution as a late RMD, even if that's what it is. I've looked at the 401(a)(9) regs, the 4974 regs, and the instructions for all the relevant IRS Forms--nothing in any of that about notifying the participant of her excise tax liability. Nothing in EPCRS about it, either (not even in the section on applying for a waiver of that same tax)--it just says to pay the late RMD, plus interest. I'd like to be able to point to a clear requirement that Plan Sponsor step up and disclose, but I'm just not finding one. Has anybody run across the rule?

Thanks!

[Guest EdShill]

If Plan Sponsor fails to make an RMD, must it notify Participant of Participant's excise tax liability? Or must Participant figure this out herself after she gets the 1099-R? If Plan Sponsor does have an obligation to inform Participant, where does this requirement originate--in the tax regs, or in ERISA's fiduciary rules? As I understand it, Participant must report the late RMD on Form 5329 and include the 50% tax; Participant may also include a request that the IRS waive the excise tax. Nothing in the Form 1099-R instructions, though, says that the sponsor has to characterize a distribution as a late RMD, even if that's what it is. I've looked at the 401(a)(9) regs, the 4974 regs, and the instructions for all the relevant IRS Forms--nothing in any of that about notifying the participant of her excise tax liability. Nothing in EPCRS about it, either (not even in the section on applying for a waiver of that same tax)--it just says to pay the late RMD, plus interest. I'd like to be able to point to a clear requirement that Plan Sponsor step up and disclose, but I'm just not finding one. Has anybody run across the rule?

Thanks!

Did you reach any conclusions on this? I am a few steps behind, with similar results so far.

[Übernerd]

If Plan Sponsor fails to make an RMD, must it notify Participant of Participant's excise tax liability? Or must Participant figure this out herself after she gets the 1099-R? If Plan Sponsor does have an obligation to inform Participant, where does this requirement originate--in the tax regs, or in ERISA's fiduciary rules? As I understand it, Participant must report the late RMD on Form 5329 and include the 50% tax; Participant may also include a request that the IRS waive the excise tax. Nothing in the Form 1099-R instructions, though, says that the sponsor has to characterize a distribution as a late RMD, even if that's what it is. I've looked at the 401(a)(9) regs, the 4974 regs, and the instructions for all the relevant IRS Forms--nothing in any of that about notifying the participant of her excise tax liability. Nothing in EPCRS about it, either (not even in the section on applying for a waiver of that same tax)--it just says to pay the late RMD, plus interest. I'd like to be able to point to a clear requirement that Plan Sponsor step up and disclose, but I'm just not finding one. Has anybody run across the rule?

Thanks!

Did you reach any conclusions on this? I am a few steps behind, with similar results so far.

Never found a definitive answer but decided (a) it looked better on the VCP filing (for waiver of the excise tax) to say that we had, and (b) we tend to favor a "forceful" reading of ERISA § 404; so, we gave notice. Don't know if that helps you.