Publication

Recently proposed Internal Revenue Service rules could disturb the operation of some nonprofit and governmental workers' retirement plans by requiring minimum distribution payments that run counter to the terms of plans formed between employees, investment firms and insurers.

The IRS' proposed rules on required minimum distributions by retirement plans, released last month, could compel nonprofits organized under Internal Revenue Code Section 501(c)(3) , public schools and churches to calculate and make required minimum distributions, which they don't have to do now...

...Aligning required minimum distribution rules between qualified plans and Section 403(b) plans makes sense conceptually, said Jorge Leon of Michael Best & Friedrich LLP. However, 403(b) plans and sponsors will face challenges in administering required minimum distributions for a host of reasons, he said. They include that 403(b) plans "are very different animals" and "many 403(b) sponsors may lack administrative resources," he said.

"Based on the specific comments the IRS seeks, it's clear that the IRS knows there will be challenges," he said.

To read the entire Law360 article, please click here.