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Make sure participants take their RMDs
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:
- On or before 6/30/1949:
- And Is NOT a 5% owner, the RMD age is the later of retirement or age 70½
- And IS a 5% owner, the RMD age is 70½ (CANNOT be delayed)
For a participant who was born:
- On or after 7/1/1949:
- And Is NOT a 5% owner, the RMD age is the later of retirement or age 72
- And IS a 5% owner, the RMD age is 72 (CANNOT be delayed)
*Assumes plan does not use pre-SBJPA RMD rules
Plan sponsors are responsible for ensuring that RMDs are taken every year. Failure to make timely required distributions is a violation of plan rules and could result in penalties and plan disqualification.
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