Missed Defined Benefit Plan Dispursement at 70.5

[Joe P]

"My father has worked for more than one employer in which he was to receive pension benefits. Unfortunately, for nothing less than not being notified, he never contacted a former employer about beginning his pension payments at 70.5 years of age. Recently the company sent paperwork saying that he is required to begin receive these benefits; however, I fear that he may be penalized by the IRS.

At no point before receiving this letter, the company nor pension company ever communicated with my father about taking these benefits."

[Gail in Virginia]

Joe, the rule about beginning distributions at age 70 and 1/2 applies to IRA accounts. Defined benefit pension plans are a different breed of animal altogether, and are largely governed by the plan documents. I don't believe there will be any penalties associated with his failure to receive benefits as far as the IRS is concerned, but you might want to consult someone local to your father about his specific situation. Particularly if this is a large employer in his area, you might be able to find someone who is familiar with this particular plan and can give you definitive answers to your specific questions. Asking general questions on a tax professionals board will only get you general answers at best, and without knowing all of the details can sometimes result in erroneous answers.

[jainen]

>>for nothing less than not being notified<<

Well, technically it was for more than trying to blame the company--a taxpayer is responsible for his own obligations. Maybe he should just close the whole account since he thinks they aren't paying attention to business. Meanwhile there is nothing you can do about the past, so don't worry about it. You can deal with the IRS if and when the question ever comes up. (Unless he was self-employed or a 5% owner, the RMD rules and penalties are the same for a company pension as for an IRA.)