$0.30 RMD - seriously?

A terminated participant has a residual balance of $5... so his RMD is less than the cost of the stamp it would take to mail the check to him.  I know there's talk of not having RMDs if the AB is <$50K, but that's not here today.  Any thoughts on just giving this a pass?  Thanks.

With a $5 balance why not just cash him out and be done?

Charge them a $25 distribution fee and send them a bill for $20!

?

 or don't pay it and let the participant know what it feels like when he has to pay a $.15 excise tax!

Been there done that and know your pain. 

Perhaps the TPA and the plan sponsor can recognize practicality: pay it all, and get the sponsor to pay the distribution fee.

What about an administrative policy that accounts less than $____ will be forfeited for fees...

Distributions of less than $10 need not be reported on Form 1099-R. And, even if it was reported on Form 1099-R, it need not be reported on his tax return.

It costs much to distribute 30Cents. There is no good reason to do it- none that I can think of.

I can beat that.  I received a notice to send the forms necessary for a 10 cent RMD.  

As others have said, just cash him out.  Most of our fees are $150 for distributions, so if someone's RMD is that amount or less, it all gets eaten up by fees. Easy fix.

The RK isn't keen on the idea of forfeiting money from a source that is fully-vested by definition, so I think I'm going to have to go the fee route.  It's almost chicken-and-egg: if there's no distribution, then how can there be a distribution fee? LOL

I can't cash him out because I outsmarted myself.  I restated this document at a time when I was having a lot of problems with uncashed checks, so I made the autorollover threshold $0 - any forceout has to be rolled over.  Millennium Trust will take small amounts (and if their fees eat it up, so be it), but I'll be darned if they get the fees for it and I don't!

And I would have the plan sponsor pay for the distribution fee, but this is one of about 25 participants where the balance is less than the combined fee of the RK + us.  After years of no PS, they made a small one two years ago and then haven't made another since, resulting in a large number of people who had never deferred with relatively small profit sharing balances.  So while the plan sponsor might be willing to pay for one distribution, they certainly don't want to pay for two dozen of them.

Thanks for all the ideas, moral support, and sympathy...

by the way, as part of the Family Savings Act there is the following, so if they ever get things finalized for us....

SEC. 109. Exemption from required minimum distribution rules for individuals with certain account balances.

(a) In general.—Section 401(a)(9) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

“(H) EXCEPTION FROM REQUIRED MINIMUM DISTRIBUTIONS DURING LIFE OF EMPLOYEE WHERE ASSETS DO NOT EXCEED $50,000.—

“(i) IN GENERAL.—If on the last day of any calendar year the aggregate value of an employee’s entire interest under all applicable eligible retirement plans does not exceed $50,000, then the requirements of subparagraph (A) with respect to any distribution relating to such year shall not apply with respect to such employee.

“(ii) APPLICABLE ELIGIBLE RETIREMENT PLAN.—For purposes of this subparagraph, the term ‘applicable eligible retirement plan’ means an eligible retirement plan (as defined in section 402(c)(8)(B)) other than a defined benefit plan.

“(iii) LIMIT ON REQUIRED MINIMUM DISTRIBUTION.—The required minimum distribution determined under subparagraph (A) for an employee under all applicable eligible retirement plans shall not exceed an amount equal to the excess of—

“(I) the aggregate value of an employee’s entire interest under such plans on the last day of the calendar year to which such distribution relates, over

“(II) the dollar amount in effect under clause (i) for such calendar year.

The Secretary in regulations or other guidance may provide how such amount shall be distributed in the case of an individual with more than one applicable eligible retirement plan.

“(iv) INFLATION ADJUSTMENT.—In the case of any calendar year beginning after 2019, the $50,000 amount in clause (i) shall be increased by an amount equal to—

“(I) such dollar amount, multiplied by

“(II) the cost of living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting ‘calendar year 2018’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.

Any increase determined under this clause shall be rounded to the next lowest multiple of $5,000.