Required Minimum Distribution
Updated: 29 February 2024
What Does Required Minimum Distribution Mean?
Required Minimum Distribution (RMD) is the minimum withdrawal for certain retirement plans, as prescribed by the Internal Revenue Service. This usually begins on the first April after the worker has reached 70.5 years of age and retires from their job.
Insuranceopedia Explains Required Minimum Distribution
Required Minimum Distribution affects those who do not withdraw from their retirement accounts during the specified date. Failure to withdraw might mean a high tax penalty. The minimum withdrawal is based on the account value and the owner’s life expectancy based on IRS calculations. When the plan owner dies, the RMD rules become different for the beneficiary.
Some of the plans that are under this withdrawal rule are SEP, IRA, and Simple IRA.
Related Definitions
Related Terms
Related Articles
Top 25 Personal Finance Bloggers to Follow on Twitter
Life Insurance as an Investment? It’s Called Permanent Insurance
Insurance Self-Service Portal: The Future of Customer Experience
Blockchain’s Impact on Transforming the Insurance Landscape
What Every College Student Should Know About Renters Insurance
Guidance for Nurses: Five Essential HIPAA Compliance Tips
Related Reading
Revealing the Most And Least Popular U.S. Insurance Companies
What Students Need to Know About Insurance Coverage During Internships
A Roadmap for Students Interested in the Insurance Industry
Strong Identity Verification in the Insurance Sector
How to Avoid Online Insurance Scams
How to Get Into the Insurance Industry With a Finance Degree