As the plan sponsor, you are responsible for ensuring that RMDs are met every year. This includes participants that have left the company or retired and may still have money in the plan. Failure to make required distributions is a violation of plan rules and could result in an IRS penalty and plan disqualification.
In general, most participants must take an RMD annually beginning in the year they reach RMD age. On December 20, 2019, the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 changed the definition of RMD age.
Effective January 1, 2020, RMD rules are now as follows:
For a participant who was born: |
AND |
The RMD age is: |
---|---|---|
On or before 6/30/1949
|
Is NOT a 5% owner |
The later of retirement or age 70½ |
IS a 5% owner |
70½ (CANNOT be delayed) |
|
On or after 7/1/1949
|
Is NOT a 5% owner |
The later of retirement or age 72 |
IS a 5% owner |
72 (CANNOT be delayed) |
Below you’ll find answers to common questions about RMDs:
* Please see IRS Publication 590-B, including Appendix B, Table II and Table III for details.