Here’s a little something not everyone heading into retirement knows about, required minimum distributions or RMDs for short. When you turn 73* and are no longer an active state employee, the IRS requires that you withdraw a certain amount of money from your retirement savings accounts each year. This is known as a required minimum distribution and how much you must withdraw depends on how much you have saved in your accounts and your estimated life expectancy, which is determined by the IRS. To calculate your RMD total, you can use the Required Minimum Distribution Calculator found on modeferredcomp.org or call 800-392-0925 to speak with one of the plan’s friendly Participant Service Representatives. RMDs must be taken by December 31st each year, or you’ll be fined a hefty 25% tax penalty. However, a special rule applies to your first RMD. You have the option of delaying your first RMD payment until April 1st following the year in which you reach age 73 or retire, whichever is later. You can withdraw your annual RMD in a lump-sum, monthly payments, or as needed throughout the year, but the total annual amount must be withdrawn by the deadline. While taking an RMD isn’t always ideal, it’s the government’s way of making sure they receive the taxes that are owed to them on your retirement savings. But wait, here’s the GOOD NEWS, the MO Deferred Comp Plan will calculate and automatically send you your RMD or the remaining balance that needs to be withdrawn to satisfy your RMD each year by the December 31st deadline. And here’s even more GOOD NEWS, starting 2024, you are no longer required to take required minimum distributions from Roth accounts.* RMDs can be a little confusing, but all you really need to know is they are required and deferred comp won’t let you miss taking them. So, sit back, relax, and enjoy retirement, we’ve got your RMD withdrawals covered.
