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Missing or Unresponsive Participants and Required Distributions from Qualified Retirement Plans

It is often difficult for retirement plans to maintain current addresses for terminated participants. If distributions are not made (or are not permitted) at the time of a participant?ÇÖs employment termination, the plan is required to make sure distributions are taken or begin either at the plan?ÇÖs normal retirement date or when the participant reaches age 70 ??, depending on the plan?ÇÖs terms. If the plan does not comply with the plan?ÇÖs distribution requirements, the plan risks disqualification. When discovered, on audit or otherwise, the plan must correct the noncompliance which often involves paying fees or penalties to avoid plan disqualification. To avoid these problems, employers should take the following steps: Examine your plan to determine when distributions are required. Many plans require the participant to file a claim to begin their benefits and do not require distributions to begin at normal retirement date. In those circumstances, distributions must begin… Continue Reading

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