If you are age 72 or above (1), and retired or a 5% owner of the company sponsoring the 401(k), you generally must start taking Required Minimum Distributions (RMDs). If you are still working and are of age 72, you may defer the RMD until you retire, as long as you are not a 5% owner of the company.
What is an RMD?
- RMD is an annual distribution you must take from your retirement account(s) after you reach the age of 72.
- You must take your first RMD by April 1st of the year after you turn 72. After you take your first RMD, you must take subsequent RMDs by December 31st of each year.
- For example if you turned 72 on January 15, 2021, you must take your first RMD, for 2021, by April 1, 2022.
Information Needed to Calculate your RMD:
- Your retirement account balance as of December 31st of the previous year.
- Your life expectancy given your current age per IRS life expectancy tables.
- If eligible, this calculation will also appear in a dashboard task (Request Your Required Minimum Distribution) under the “Tasks and Notifications” section.
Tax Implications & Fees
- Failure to request an RMD, may be penalized with an excise tax equal to 50% of the difference between the actual amount distributed and the RMD for the relevant tax year. (2)
How can I begin my RMD request?
If eligible, you will receive a task notification in your dashboard’s “Tasks and Notifications” section and will find the RMD Distribution Form within the Forms folder of your Resource Library.
How long until I receive my check?
Submit the form to us through the “Request Your Required Minimum Distribution” dashboard task. Standard processing and shipping will take approximately 3-4 weeks.
Please go here to learn more about CARES Act changes affecting RMDs and your options for withdrawing funds from your 401(k) account.
(1) If you turned age 70 ½ prior to January 1, 2020, your RMDs are based on age 70 ½, not age 72. If you were born on 6/30/49 or earlier, you must begin taking RMDs at age 70 ½. For example, if you turned 70 on May 05, 2018 then you reached age 70 ½ on November 05, 2018. You must take your first RMD (for 2018) by April 1, 2019.
(2) This information is for general education purposes only and not intended to be tax advice. We encourage you to consult a qualified tax professional before requesting a distribution.