HR/Benefits/Retirement Planning Guide/Other Considerations
Other Considerations: Minimum Distribution Laws
You may wish to defer beginning your retirement income. However, you should be aware that there are federal minimum distribution rules, which require you to receive some income from your retirement plan contributions and earnings.
- Federal minimum distribution rules require that you begin receiving some income from your retirement plan accumulations by April 1 after the year you either (1) turn 70½ , or (2) retire, whichever comes later.
- Once you begin minimum distributions, you must continue to receive income each year thereafter to satisfy these rules. You are responsible for beginning minimum distributions; your investment carrier(s) can provide you with guidance.
- If you do not comply with these rules, you could become subject to a 50% excise tax on your minimum distribution.
- If you are of sufficient age to begin minimum distributions, you may wish to select the minimum distribution payment option as your payment option. This option may be appropriate if you want to maximize income deferral and preserve your accumulation, you have other income that is adequate for your basic income needs or you want to postpone selecting an annuity or other distribution method.
Note: Please consult with your 401(a) investment carrier(s) to obtain more information
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