Required Minimum Distributions

In general, you can continue to utilize the tax advantages through your employer's plan as you enjoy retirement. However, the Internal Revenue Service (IRS) requires that you begin to take annual required minimum distributions (RMD) from your account once you reach your required beginning date (RBD). Generally, your RBD is April 1 of the calendar year following either your attainment of your RMD age or, if your plan allows, the year in which you separate from employment, whichever is later. Your RMD age may vary dependent upon your date of birth as seen below.

Age 70½ (if you are a Participant born before July 1, 1949).

Age 72 (if you are a Participant born after June 30, 1949, and before January 1, 1951).

Age 73 (if you are a Participant born after December 31, 1950, and before January 1, 1960).

Age 75 (waiting for clarification from the IRS on applicable birthdates).

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.

Generally, the amount of your RMD is calculated using your account value as of the end of the preceding calendar year divided by your life expectancy factorⁱ . If you choose to defer your first RMD to following year, the amount required to be taken for that RMD will not change, and you will have to also take your second RMD by December 31 of the same year.

Example: You are retired and you attain your RMD age on June 1, 2021. You can wait until April 1, 2022 to take your first RMD, but it will be based on your account value as of December 31, 2020. You will also have to take your second RMD by December 31, 2022, and it will be based on your account value as of December 31, 2021.

If you fail to withdraw at least the amount of your RMD 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%.

How much will my RMD be?

Nationwide, your employer’s plan administrative service provider, will calculate your RMD amount each year and work with you to ensure you receive it in time to comply with the RMD rules.

To establish your RMD, you can do any of the following:

• Your plan may allow you to complete an Online Distribution Request; or
• Download and complete the Form (PDF); or
• Contact Us using the link at the top of the page.

What if I'm still working?

Generally, if your plan allows, you are not required to take a minimum distribution if you are still employed with the employer through which you have your accountⁱⁱ . However, once you separate from employment you are required to begin minimum distributions no later than April 1 of the following calendar year. 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.

What if I am a Beneficiary?

As a Beneficiary, your RMD calculation is impacted by a number of factors.

If the Participant’s death occurs after the RBD has been met, any unsatisfied RMD value in the year of death will be paid out to any Beneficiaries at the time a claim is madeⁱⁱⁱ .

Generally, Eligible Designated Beneficiaries (EDBs)^iv are required to take RMDs^v . Spousal EDBs who claim the account timely^vi 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. In general, Non-Spousal EDBs are required to begin taking RMDs in the calendar year immediately following the year of the Participant’s death.

Most EDBs are allowed to keep the account open for up to their own life expectancy^vii . However, minor children are required to fully liquidate the account no later than the end of the year in which they attain age 31^viii .

Designated Beneficiaries (DBs)^ix who claim the account timely are not required to take annual RMDs if the Participant passed away prior to reaching RBD, but 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 RBD, then DBs are required to take annual RMDs and also fully liquidate the account no later than the end of the year containing the 10th anniversary of the Participant’s death.

For Non-Designated Beneficiaries (NDBs)^x , RMDs are required to begin in the calendar year immediately following the year of Participant’s death if the Participant passed away after reaching RBD. If the Participant passed away prior to reaching RBD, then NDBs are not required to take annual RMDs, but are required to fully liquidate the account no later than the year containing the 5th anniversary of the Participant’s death.

The RMD rules which apply to untimely claims and multiple trust beneficiary situations are very complex. If this applies to you, you should discuss with your legal counsel or tax advisor.

What if I am an Alternate Payee?

Spousal Alternate Payees, in general, are not required to begin taking RMDs until the year in which original Participant attains RMD age^xi .

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.

Get the help you need

Contact our Solutions Center using the Contact Us link at the top of the page to speak with a Representative regarding any further questions you may have.

---

ⁱ 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
ⁱⁱ If you are at least a 5% owner of the company through which you have the account then you are required to take an RMD regardless of your employment status.
ⁱⁱⁱ 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.
^iv 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, or a see-through trust Beneficiary(ies) who would otherwise qualify as an EDB.
^v EDBs may elect to follow the 10-year liquidation rule rather than the life expectancy rule. If such option is chosen, the EDB would be treated under the Designated Beneficiary guidelines for RMD calculation purposes.
^vi 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.
^vii 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.
^viii If the Participant died prior to 2022 (2020 for non-governmental plans), then minor beneficiaries are not subject to the age 31 liquidation requirement.
^ix Designated Beneficiaries (DBs) are defined as a Beneficiary(ies) who falls into one of the following categories: an individual who does not otherwise qualify as an EDB or a see-through trust Beneficiary(ies) who would otherwise qualify as a DB. 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.
^x Non-Designated Beneficiaries (NDBs) are defined as non-individual entities such as charities, organizations, estates, or non-see-through trusts.
^xi 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.