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 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 70 ½ on June 1, 2012. You can wait until April 1, 2013 to take your first RMD, but it will be based on your account value as of December 31, 2011.
If you defer your first RMD to the last possible date, you’ll have to take two RMDs in the same year, one on April 1 and another by the end of the year. The amount of the second RMD will be based on your previous year-end account value. In the example above, you’d have to take your second RMD by December 31, 2013 and the amount would be based on your account value as of December 31, 2012.
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.
Get the help you need
Talk with one of our Retirement Specialists if you have questions about arranging your distribution.