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Additional distribution to RMD and no in-service allowed under DB plan

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Here is a new one for me.

Told the active client RMD was 3k/month for 9 months (first year) but took 10.

There is no in-service allowed under the plan document.

Is this something that can be corrected under SCP?

There was no withholding nor spouse consent done as I just found out and was never told about this.

I know it is a small amount but I still want to make sure all ducks are in a row.


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This sounds like it would fall under the definition of an "overpayment" under both EPCRS and SECURE 2.0 sec. 301, so you do have some correction options.

I think the easiest thing to do might be to reduce the future payments.

You could also amend the plan to increase the benefit so that the actual payment becomes the correct payment.

The plan could ask the participant to repay the excess.

What I would probably not do, is decide not to seek recoupment of the overpayment and just let the participant keep it. While this could be an acceptable option under SECURE 2.0 sec. 301 in certain cases, there is an exception for when the participant is culpable. In your case since the participant is also the sponsor, I think there is too much risk that they could be considered culpable, even if it was just an honest mistake. There is also an exception that this is not allowed if it would cause the plan to violate 415 or 401(a)(17) - I don't know if that applies in this case.

Regarding spousal consent, is the benefit being paid in a form that requires spousal consent? If it's a QJSA or QOSA then the spousal consent wouldn't be needed. If it's some other form of annuity benefit, then the correction under EPCRS is to get the spousal consent now.

Withholding isn't mandatory on periodic distributions. Ideally the participant would have completed a W-4P for 0% and given it to himself (as the plan administrator). If that wasn't done before, do it now.

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.

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Good points but I still think that the extra (paid to the spouse of the owner) payment is not a periodic payment.

You are correct that no spousal consent would be needed as it is 50J&S however, I still think this is a distribution thus withholding.

From what I have been reading this is not a biggie but that fact that the plan does not provide in-service past NRA is an issue.

All above are intellectual discussion purposes and see if I missed anything here from reading SCP rules.

However, your suggestion on asking for the money back is definitely a sound one and looks good on good faith. Thank you for that.

This is pretty much owner asking the spouse to return the monies.

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