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What You Need to Know About RMDs

Required Minimum Distributions (RMDs) are minimum withdrawals that the IRS requires from most retirement plan accounts every year once the account owner reaches a certain age. Since you are receiving a Colorado PERA benefit, your PERA Defined Benefit (DB) Plan is already paying out the required amount to satisfy an RMD for the DB Plan. But you may need to take action to satisfy an RMD if you participate in the PERA Defined Contribution (DC) Plan or voluntary retirement plans like:

  • 403(b) plans
  • 401(k) and 457(b) plans, like the PERAPlus Plans
  • Traditional IRAs
  • SEPs and SARSEPs
  • SIMPLE IRAs

When to Take Your First RMD

Your first RMD date depends on when you were born. Your first RMD is due by April 1 of the year after you reach the IRS-required age listed below. All future RMDs must be taken each year by December 31.

  • If you were born before July 1, 1949, you must take your first distribution by age 70½.
  • If you were born on or after July 1, 1949, but before January, 1951, you must take your first distribution by age 72.
  • If you were born on or after January 1, 1951, but before January 1,1960, you must take your first distribution by age 73.
  • If you were born on or after January 1, 1960, you must take your first distribution by age 75.

Your first RMD is required by April 1 of the year after the year you reach your IRS-required age.

If you do not take an RMD, don’t withdraw enough money, or don’t take your distribution by the deadline, the RMD amount not withdrawn is subject to a 25% penalty from the IRS, unless corrected within two years (in which case the penalty is 10%). Keep in mind that you can always withdraw more than your required amount. Any amount you withdraw is considered taxable income unless it was taxed before you contributed the money to your plan, or it can be withdrawn tax-free (like qualified withdrawals from Roth accounts).

More information on RMDs, including worksheets to help you calculate your RMD amount, can be found on the IRS website or by speaking to a trusted financial advisor.