[This article was archived on 1/3/2017.]
Are you age 70½ or older and retired? If so, the IRS requires that you begin taking annual withdrawals from your defined contribution retirement plan (e.g. 401(k), 403(b), 457(b) or 401(a) profit-sharing plan).
The IRS sets the minimum amount of these withdrawals, called Required Minimum Distributions (RMDs), which are taxed as income in the year in which they are received. Similar RMD rules also apply to Traditional IRAs, including SEP and SIMPLE plans. If you are a beneficiary of a Roth IRA account, you are not required to take distributions.
When to Take RMDs
Your first RMD from a defined contribution plan must be taken by April 1 of the year following the calendar year that you turn 70½ or the calendar year you retire, whichever is later (unless you are a 5% owner of the business sponsoring the plan, in which case your RMDs will begin even if you are still working).
Your first RMD from a Traditional SEP or SIMPLE IRA generally must be taken by April 1 of the year following the calendar year you turn 70½, regardless of whether you are still working. After the first RMD, you must take subsequent RMDs by December 31 of each year, including the year of your first RMD. In other words, for the calendar year after you turn 70½, you may get two RMDs—one on or before April 1, and one on or before December 31. To avoid having both of these amounts included in your income within the same calendar year, you can make your first withdrawal by December 31 of the year you turn 70½ instead of waiting until April 1 of the following year. Keep in mind that you are responsible for taking the correct amount of RMDs from your accounts on time every year. If you fail to do so, the IRS may impose an additional tax equal to 50% of the undistributed RMD.
We're Here to Help
Please call your local Mutual of America Regional Office representative or 1-800-468-3785 today for complete information on RMDs, including your required RMD amount and how to take withdrawals automatically through the Automatic Minimum Distribution Option.
Before investing, you should carefully consider the investment objectives, risks, charges and expenses of the variable annuity contract and the underlying investment funds. This and other information is contained in the contract prospectus or brochure and underlying funds prospectuses and summary prospectuses. Please read the contract prospectus or brochure and underlying fund prospectuses and summary prospectuses carefully before investing. The contract prospectus or brochure and underlying fund prospectuses and summary prospectuses can be obtained by mail or by calling 1-800-468-3785.
Mutual of America's group and individual retirement products are variable annuity contracts and are suitable for long-term investing, particularly for retirement savings. The value of a variable annuity contract will fluctuate depending on the performance of the Separate Account investment funds you choose. Upon redemption, you could receive more or less than the principal amount invested. A variable annuity contract provides no additional tax-deferred treatment of benefits beyond the treatment provided to any qualified retirement plan or IRA by applicable tax law. You should carefully consider a variable annuity contract's other features before making a decision.