3rd Quarter 2014

Retiree Corner: Required Minimum Distributions

CalendarAfter years of saving in your 401, 457, and traditional individual retirement accounts (IRAs), you must begin taking withdrawals when you reach age 70½ .

You can delay your first required minimum distribution (RMD) until April 1 of the year following the year you reach age 70½, but you would have to take two RMDs that year because the second payout is required by Dec. 31 of that year, too. After that, all RMDs must be withdrawn annually by year end. If you’re working after age 70½ , you don’t have to take RMDs from your current employer’s retirement plan until you separate from service. (RMDs from traditional IRAs are still required.)

If you fail to take RMDs, you are subject to a 50 percent penalty on the amount that should have been withdrawn. To help you avoid this penalty, ICMA-RC automatically calculates your RMDs for your 401 and 457 accounts and sends the payments to you. Make sure that ICMA-RC has your birth date and date of separation information. ICMA-RC also calculates your RMD for your traditional IRAs, but doesn’t send you the money automatically.

For more information about RMDs, including a helpful checklist, see www.icmarc.org/rmd.

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