If you are age 70 ½ or above, and retired or a 5% owner of the company sponsoring the 401(k), you generally must start taking Required Minimum Distributions (RMD). If you are still working and are of age 70 ½, 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 (required minimum distribution) is an annual distribution you must take from your retirement(s) account after you reach the age of 70 ½.
- You must take your first RMD by April 1st of the year after you turn 70 ½. After you take your first RMD, you must take subsequent RMD’s by December 31st of each year.
- For example, if you turned 70½ on July 15, 2019. You must take your first RMD, for 2019, by April 1, 2020.
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
- A $50 distribution fee is incurred to process RMD distributions.
- 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. (1)
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.
(1) 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.