Taking Required Minimum Distributions from Your Retirement Account
What are RMDs?
Required Minimum Distributions or RMDs are withdrawals you must take from your retirement account each year beginning at a specific age or you'll be subject to a 50% penalty tax. For taxable years beginning after Jan. 1, 2023, this penalty has been reduced to 25% and further reduces to 10% if you receive a distribution within the correction window.
Exceptions generally include:
- Roth IRAs*
- Your very first RMD, which you can delay until April 1 of the following year, but which would require you to take two RMDs that year
- Retirement plans sponsored by your current employer, for which RMDs can be delayed until the year you separate from service
RMDs are taxable, except to the extent they represent after-tax or non-deductible contributions. RMDs can’t be rolled into another retirement account.
When do RMDs start?
Starting Jan. 1, 2023, the RMD age increased as part of the Setting Every Community Up for Retirement Security (SECURE) 2.0 Act. Here are the new requirements.
| Date of Birth | RMD Age |
|---|---|
| December 31, 1950 and earlier | No changes to current RMD schedule |
| Jan. 1, 1951 to Dec. 31, 1958** | 73*** years old |
| Born Jan. 1, 1960 or later | 75 years old |
How much is my RMD?
Your RMD is calculated based on your age, your prior year-end account balance, and whether you have one or more beneficiaries. RMDs must be withdrawn separately for each of your 401, 403(b), or 457 plan accounts. Try our RMD calculator to estimate your future RMDs.
How do I take an RMD from my MissionSquare Retirement account?
You can withdraw your entire RMD in one payment, take partial payments throughout the year, or periodic installment payments. You can always withdraw more than the RMD amount during the year, but not less. To request a withdrawal, log in to your account or contact your MissionSquare representative.
If you don’t submit a withdrawal, MissionSquare will automatically disburse the appropriate RMD payment to you in the form of a lump-sum check payment. We do this to help you avoid the penalty tax for failing to withdraw the appropriate RMD payment.
When your RMD is automatically disbursed, you can’t adjust your tax withholding or have the payment deposited directly into your bank account.
We don’t automatically distribute IRA assets since IRS rules allow individuals who have more than one IRA account to withdraw their total IRA-associated RMD from just one account. Learn more about managing your RMDs.
Questions? We’re here to help.
* Exception: Roth IRA assets in Inherited IRA accounts.
** The RMD age for those born in 1959 was not clear in SECURE 2.0. MissionSquare expects regulatory or legislative clarifications this year.
*** Age 70½ (if you were born before July 1, 1949), age 72 (if you were born after June 30, 1949, and before January 1, 1951), or age 73 (if you were born after December 31, 1950).