Required Minimum Distributions (RMD)
What is an RMD?
An RMD, or Required Minimum Distribution, is the minimum amount you must withdraw from your retirement accounts each year after reaching RMD age. Here are the key points about RMDs:
- When to Start: Once you retire or if you are a rehired annuitant, you generally need to begin taking withdrawals from your retirement plan accounts when you reach one of the following depending on your birthdate:
- 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.
- Age 73 — If you were born after December 31, 1950, and before January 1, 1960.
Your first RMD can be deferred until April 1 of the calendar year following your separation of service.
Note: If you are a Beneficiary, your RMD amount is impacted by several factors. For more information, please see the "What if I am a Beneficiary" section below under Frequently Asked Questions.
- Calculations: Your RMD is calculated for you at the beginning of January each year. You can view your RMD amount by accessing your online account.
- Exceptions: Starting in 2024, Roth money sources are no longer included in RMD calculations and withdrawals from Roth money sources will not satisfy your RMD. This exception does not apply to beneficiary accounts.
- Taxes: RMDs from pre-tax accounts are generally subject to ordinary income taxes. Additionally, RMDs cannot be rolled over to another eligible retirement plan or IRA.
- Penalties: If you fail to withdraw your RMD amount in a year in which you are required to do so, you may be subject to an excise tax of 25% of any unsatisfied RMD amount.
Remember that while RMDs are mandatory, you should always consult with a financial professional to ensure compliance with RMD rules and optimize your retirement strategy.
Get the help you need
See the Frequently Asked Questions below or contact our Solutions Center to speak with a Representative regarding ay further questions you may have.
Frequently Asked Questions
As a Beneficiary, your RMD calculation is impacted by a number of factors. For more information about your withdrawal options a Beneficiary you can use the Beneficiary Withdrawal Fact Sheet.
The amount of your RMD is calculated using your total account value, including Roth assets, as of the end of the preceding calendar year divided by the life expectancy factor for your beneficiary category.
Note: If the Participant’s death occurs after meeting RMD age, any unsatisfied RMD value in the year of death will be paid out to any Beneficiaries at the time a claim is made.
The RMD rules which apply to untimely claims are very complex. If this applies to you, you should discuss with your legal counsel or tax advisor.
Eligible Designated Beneficiaries (EDBs) are defined as a Beneficiary(ies) who, at the time of the Participant’s death, is one of the following:
- surviving spouse
- child of the Participant who has not reached the age of majority (age 21)
- individual not more than 10 years younger than the Participant,
- individual with a disability
- individual with chronic illness
- a see-through trust Beneficiary(ies) who would otherwise qualify as an EDB.
Spousal EDBs who claim the account timely are not required to begin taking RMDs until either the calendar year in which the Participant would have attained RMD age or the calendar year immediately following the year of the Participant’s death, whichever is later.
Note: Spousal beneficiaries can elect to be treated at the employee for RMD purposes. Call the Solutions Center for more information about this election.
In general, Non-Spousal EDBs are required to begin taking RMDs in the calendar year immediately following the year of the Participant’s death.
Minor children are required to begin payments the year following the Participant’s death and must fully liquidate the account no later than the end of the year in which they attain age 31.
Designated Beneficiaries (DBs) who claim the account timely prior to the Participant reaching RMD age, are not required to take annual RMDs. DBs are required to fully liquidate the account no later than the end of the year containing the 10th anniversary of the Participant’s death.
However, if the Participant passed away after reaching RMD age, then DBs are required to take annual RMDs the year following the Participant’s death and also fully liquidate the account no later than the end of the year containing the 10th anniversary of the Participant’s death.
Non-Designated Beneficiaries (NDBs) are defined as non-individual entities such as charities, organizations, estates, or non-see-through trusts. NDBs must begin RMDs in the calendar year immediately following the year of Participant’s death.
Nationwide, your employer’s plan administrative service provider, will calculate your RMD amount each year and work with you to receive it in time to comply with the RMD rules
For participants and alternate payees, the amount of your RMD is calculated using your pre-tax account value as of the end of the preceding calendar year divided by your life expectancy factor. If you are a Beneficiary, your RMD amount is calculated using your total account value and depends on your beneficiary categorization (see "What if I am a Beneficiary" section above for more information).
If you are still employed with the State of California, you are not required to take a required minimum. However, once you separate from employment you are required to begin RMDs no later than April 1 of the following calendar year.
Note: If you are a rehired annuitant, you are required to take an RMD.
Once you retire and have met your RMD age, you must begin withdrawals. Your first RMD can be deferred until April 1 of the following calendar year. All subsequent RMDs cannot be deferred and must be completed by the end of the calendar year.
Example: You are retired, and you attain your RMD age on June 1, 2024. You can wait until April 1, 2025 to take your first RMD, but it will be based on your account value as of December 31, 2023.
To receive your RMD, you can do any of the following:
- Log in to your online account to complete an Online Distribution Request; or
- Download and complete the Withdrawal Request Booklet; or
- Contact Us using the link at the top of the page.
If you have a PCRA, your core account balance must have sufficient funds to cover the unsatisfied RMD plus the core minimum requirement. It is your responsibility to maintain your core account balance.
If you fail to withdraw your RMD amount in a year in which you are required to do so, you may be subject to an excise tax of 25% of any unsatisfied RMD amount. Under certain circumstances, the excise tax can be reduced to 10%.
Spousal Alternate Payees, in general, are not required to begin taking RMDs until the year in which original Participant attains RMD age.
Non-Spousal Alternate Payees, in general, are also not required to begin taking RMDs until the original Participant attains RMD age, unless the Participant passes away prior to reaching RMD age, in which case RMDs must instead begin in the calendar year immediately following the year of death of the Participant.
You may wish to consult your own counsel or tax adviser before making decisions about distributions. Neither Nationwide nor its representatives may offer tax or legal advice.
Life expectancy factors are determined using one of three IRS Life Expectancy Tables. The Uniform Lifetime Table would generally be used by Participants and by Alternate Payees. The Joint and Last Survivor Table would generally be used by Participants who have designated their spouse (who is more than 10 years younger than the Participant) as sole Beneficiary and by Spousal Alternate Payees (who are more than 10 years younger than the Participant). The Single Life Table would generally be used by Beneficiaries and by Alternate Payees who elect to use their own life expectancy rather than that of the Participant. These tables can be found here: https://www.irs.gov/publications/p590b.
This RMD may be adjusted for investment earnings on the unsatisfied RMD amount if the claim is made after December 31 of the year of death.
A timely claim by a Beneficiary is defined as a claim made no later than December 31 of the calendar year immediately following the year of death of the Participant. A Beneficiary’s life expectancy is defined using the Single Life Table and the age the Beneficiary would attain in the calendar year immediately following the year of Participant’s death. When the Participant dies after reaching the RBD and the Participant’s remaining life expectancy in the year of death is greater than the Beneficiary’s life expectancy in the year after death, the Participant’s remaining life expectancy will be used instead.
If the Participant died prior to 2022 (2020 for non-governmental plans), then minor beneficiaries are not subject to the age 31 liquidation requirement.
If the Participant died prior to 2022 (2020 for non-governmental plans), then DBs would generally be required to take RMDs beginning in the calendar year immediately following the year of Participant’s death and they would be eligible to maintain the account for up to their life expectancy.
In instances where the Participant is alive, Alternate Payees are eligible to defer their initial RMD until April 1 of the calendar year immediately following either the calendar year in which the Participant attains RMD age or, if the plan allows, the calendar year in which the Participant separates from employment, whichever is later.