In the past 35 years, it changed on who had to take out a required minimum distribution (RMD) from a qualified retirement plan. Thankfully, it hasn’t changed since 1997. So a person who is a 5% owner has to take out an RMD from the plan after attaining age 70 ½. Non-owners can wake for their RMD until they retire.
As a plan sponsor, you need to make sure that you watch out for 5% owners who may be near their RMDs as well as non-owners who are no longer working for you and cant be found. RMDs are a big issue because a failure of a participant to take an RMD will get that a participant a huge 50% excise tax.
If you do mess up, it’s on you as a plan sponsor to fix that and the best bet is an application to the Internal Revenue Services’ Voluntary Compliance Program to seek a way out of the participant getting a 50% excise tax.