Make Sure I Comply with Required Minimum Distribution
In general, you can continue to enjoy the benefits of tax deferral through your employer's plan as you enjoy retirement. In fact, depending on your age, you may be able to delay accessing your assets until you're ready to begin withdrawing them.
However, in exchange for offering a tax-deferral benefit, the IRS requires that you begin to take yearly required minimum distributions (RMD) from your account. These RMDs are generally subject to ordinary income taxes and cannot be rolled over to another eligible retirement plan or IRA.
Generally, the latest you can wait to begin taking RMDs is April 1 of the calendar year after the year in which you reach age 70½ (if you were born before July 1, 1949) or age 72 (if you were born after June 30, 1949) or the year in which you retire or separate from employment, whichever is later. The amount of your RMD is normally based on your account value as of the previous year end; however, if you wait until the last possible date to take your first RMD, it will be based on your year-end account value two years prior.
Example: You turn 72 on June 1, 2020. You can wait until April 1, 2021 to take your first RMD, but it will be based on your account value as of December 31, 2019.
Example: You turned 70 on June 1, 2019. You reached age 70 ½ on December 1, 2019. You can wait until April 1, 2020 to take your first RMD (for 2019), but it will be based on your account value as of December 31, 2018.
Example: You turned 70 on July 1, 2019. You reached age 70 ½ on January 1, 2020. You can wait until April 1, 2022 to take your first RMD (April 1st of the year after you reach age 72).
If you defer your first RMD to the last possible date, you’d have to take your second RMD by December 31, 2021 and the amount would be based on your account value as of December 31, 2020.
How much will my RMD be?
One of the key benefits of continued participation in your employer's plan is that, as its administrative service provider, Nationwide will calculate your RMD amount each year and work with you to ensure that you receive it in time to comply with the regulation.
However, you may want to structure how your distributions are made in advance. To do so:
- Download and complete the Retirement Benefit Options Form (PDF); or
- Contact us by phone to sign up
What if I'm still working?
Generally, if you are still employed, you are not required to take your minimum distribution until April 1st of the calendar year following the year you retire. You should consult your own counsel or tax adviser before making decisions about distributions. Neither Nationwide nor its representatives may offer tax or legal advice.
What if I am a Beneficiary or Alternate Payee?
The RMD amount is calculated for you each year by dividing your account balance as of the prior year on December 31st by the appropriate life expectancy table factor.
Get the help you need
Talk with one of our Retirement Specialists if you have questions about arranging your distribution.