What is a Required Minimum Distribution?

The Federal Government allows the deferral of taxes on both your contributions and their earnings as an incentive to help you save for retirement, but this is not intended to be a permanent tax shelter. To that end, the Federal Government established minimum distribution rules, or Required Minimum Distributions (RMD). Generally, you must begin taking them by April 1 following the calendar year in which you turn age 70½ or retire from the employer sponsoring the retirement plan – whichever comes later. Subsequent distributions are required every year by December 31.

The amount of the distribution is calculated by the Internal Revenue Service (IRS) based on your account balance and life expectancy. If you don’t take an RMD within the appropriate time – or if you withdraw too little – you may be subject to an IRS penalty tax. The penalty tax is 50% of the amount you should have withdrawn during the year, so it’s important that you take your RMD on time!

How does the Plan help?

Using the IRS calculations, each January the Plan calculates the RMD amount for each applicable participant. RMD reminders are sent in April and October. If you don’t take your RMD during the year, the Plan will automatically send you a check for your RMD amount in December to ensure you don’t face the IRS penalty.  We encourage you to check with your tax advisor to confirm your RMD amount before December.

If you have added your bank information to your Plan account, you can also have your RMD withdrawal deposited directly into your checking or savings account. Learn more about how to establish online banking by clicking the button below.

How to add your Bank information

Personal Info > Banking Information > Add/Edit Banking info.  

You will need your bank’s routing number and your account number.  It will take seven business days after you enter the required banking information to establish this feature for distributions or loan payments.

Why add your Banking Information?

When you add your banking information to your Personal Info, you can have Plan withdrawals and loans deposited directly into your checking or savings account. If you take out a retiree loan, this is also how your monthly loan payments will be paid.