USAA Required Minimum Distribution (RMD) Guide

Transcription

1 10750 McDermott Freeway San Antonio, Texas USAA Required Minimum Distribution (RMD) Guide USAA means USAA Federal Savings Bank, USAA Investment Management Company, USAA Life Insurance Company and USAA Life Insurance Company of New York. What Is An RMD? Assets in most tax-deferred retirement plans cannot continue to grow tax-deferred indefinitely; therefore, once you reach age 70 1/2 you must withdraw at least a minimum amount beginning that year and each year thereafter. Generally, all tax-deferred retirement plans (other than Roth Individual Retirement Arrangements (IRAs) during the account owner s lifetime) are subject to RMDs. All these requirements come from federal law. When Am I Required To Take My Distributions? Annual minimum distributions must be withdrawn no later than Dec. 31 of the year beginning with the year in which you reach age 70 1/2. For the first calendar year in which you must start taking RMDs (i.e., the year in which you reach age 70 1/2), you may delay your withdrawal until April 1 of the following calendar year. If you elect to delay your first distribution until April 1 of the year after you reach age 70 1/2, you will be required to receive two minimum distributions in that calendar year. When you take two RMDs in the same year, both payments are subject to federal income tax for that year. NOTE: Qualified plans (i.e., 401(k) plans or certain other employer-provided plans), Keoghs, and 403(b) plans are also subject to RMDs as described above, but RMDs for those plans may be postponed until you retire (unless you are 5% owner of the employer sponsoring the plan). What If I Fail To Take My RMD? If you miss a withdrawal or take out too little, you will generally owe a 50% excess accumulation federal penalty tax on the shortfall. In addition, you must still withdraw the correct amount and pay any income tax due. Is My RMD Taxable? Distributions from your retirement plans generally must be reported as ordinary income and are generally subject to taxation. Distributions attributable to non-deductible IRA contributions and other after-tax contributions are not taxable. How Is The RMD Amount Determined? Based on current Internal Revenue Service (IRS) regulations, the RMD amount is generally determined by dividing your retirement plan balance as of the end of the prior year by your distribution period, which is based on life expectancy. How Do The Rules Apply When I Have More Than One Retirement Plan? IRS minimum distribution regulations generally require you to calculate a RMD amount separately for each retirement plan you have. However, if you have more than one retirement plan, you may add together the RMD amounts for all like plan types and withdraw the total amount from any one or more of your like plans. For this purpose, Traditional, SEP, and SIMPLE IRAs are like plans; 403(b)(7) Mutual Fund and 403(b)(1) Tax Sheltered Annuity, are like plans; Keoghs are a unique plan type. BANK BNRMDI Page 1 of 6

2 What Are My Options For RMD Payouts? You can choose to have your distributions made in the form of systematic withdrawals, or you can roll your plan over into an annuity and immediately begin receiving a lifetime stream of payments. Can I Have My Distributions Automatically Deposited Into Another USAA Account Of My Choice? Yes. This free service is fast and efficient, and sends your distribution directly to the account you choose. We have many account types from which you can choose. What If I Do Not Have Enough Cash Available In My Account? Your RMD will not process. It is your responsibility to ensure your account has enough available cash. This guide is only a general overview of the subject matter discussed and should not be construed as tax or legal advice. The applicable law concerning retirement plans is very complex, the penalties for non-compliance are severe, and the applicable tax laws of your state may differ from the federal laws. Therefore, you should consult your tax and legal advisers regarding the tax and legal consequences of your retirement plans. BANK BNRMDI Page 2 of 6

3 10750 McDermott Freeway San Antonio, Texas Distribution (RMD) Form STEP 1: Complete the following information. STEP 2: Sign on last page where indicated and send completed document to USAA Federal Savings Bank at using one of the options on the cover page. Account Information USAA Number Participant Name Is this a new set up or is this form to make changes to an existing set up? o New o Existing NOTE: If answer is existing, only complete the fields that need changes made. Calculation Options A. Please answer the following questions so that we may determine if special RMD calculation rules apply. Is your spouse the sole primary beneficiary of this plan? o Yes o No Is your spouse more than 10 years younger than you? o Yes o No NOTE: This form is not used to change your beneficiary designation. Please log on to usaa.com to download Beneficiary Change Form. B. When calculating my RMD, include the following USAA plans. We do not consider accounts with other institutions. Please select at least one of the following options: o Mutual Fund Accounts o Money Market Accounts o Brokerage Accounts o Annuity Contracts o CD Accounts o Beneficiary IRA NOTE: This form is for the RMD based only on your balance for the above accounts. However, if you have more than one retirement plan, you may combine the RMD amounts for all like plan types and withdraw the total amount from any one or more of your like plans. For this purpose, Traditional, SEP, and SIMPLE IRAs are like plans; 403(b)(1) and 403(b)(7) are like plans; Keoghs are a unique plan type. C. If you transferred your IRA to USAA from another firm in the current calendar year and have not yet taken your RMD for that account this year, indicate the firm s name and Fair Market Value (FMV) of that IRA as of Dec. 31 of last year. Your RMD calculation will include this additional non- USAA account value. Institution Name Fair Market Value (FMV) $ BANK BNRMDI Page 3 of 6

4 D. If you have taken a distribution from your IRA in the current calendar year and would like to decrease your current year RMD amount by the distribution amount, indicate the amount already distributed to you this year. Amount $ Distribution Options Distributions will be made from the account earning the lowest rate of interest. Distribution Frequency - o I would like to defer my first year RMD to the year following I turn age 70 1/2. Calculate and distribute first year RMD on (MM/DD/YYYY) Jan. 1 April 1 Only NOTE: If you choose to delay your first distribution until the year after you reach age 70 1/2, you will be required to receive two minimum distributions in that calendar year. When you take two RMDs in the same year, you will be subject to income tax for both distributions for that tax year. Please select the frequency and corresponding date for your distributions. 1. I would like to receive my distributions: o Monthly o Quarterly - (check one month below and the RMD will occur every three months starting that month) o Semiannually - (check one month below and the RMD will occur every six months starting that month) o Annually - (check on month below) o Jan o Feb o Mar o Apr o May o Jun o Jul o Aug o Sep o Oct o Nov o Dec 2. I would like to take my distribution on the: o 10 th o 15 th o 20 th NOTE: If a date is not indicated, your required minimum distribution (RMD) will occur on the 15 th. If your distribution date is on a weekend or holiday, then your distribution will occur the following business day. 3. If specific dollar amount, please indicate here: (optional) $ 4. Please provide the month and year you request the first distribution to be processed on: MM/YYYY BANK BNRMDI Page 4 of 6

5 Payment Options Please select one. If a selection is not made or the account requested is not on your profile, a check will be mailed to your address of record. o Deposit proceeds into my existing non-ira USAA account. Federal Savings Bank Checking or Savings Account Number (provide last four digits of account) o Life Insurance of Annuity Contract Number(s) o Mutual Fund Account Number(s) o Brokerage Account Number(s) o Deposit to my existing funds transfer account (provide last four digits of account) o Mail check to address of record NOTE: Transfers generally are deposited in two to five business days. Federal and State Tax Withholding When you elect to have federal income tax withheld, some states require your financial institution to also withhold state taxes. If you reside in DE, GA, IA, KS, MA, ME, NC, NE, OK, OR, VT or VA (SIMPLE IRA plans only), we are required to withhold state income tax at the rate prescribed by your state. If you reside in AR, CA, MI, regardless of your federal withholding election, we are required to withhold state income tax at the rate prescribed by the state unless you elect no state income tax withholding. Based upon the state you reside in; a state specific form may be required to elect or not elect to withhold state taxes. If a form is required, a completed form must be received before your request can be processed. If no tax is withheld, you may still be subject to federal and state tax on this income. You may also be subject to IRS penalties under rules for estimated tax if your payments of estimated tax and federal/state tax withheld, if any, are not sufficient. Your withholding election will remain in effect until revoked by you in writing. Federal Tax Withholding Election (select one): o I elect NOT to have federal income tax withheld from my retirement plan distribution. o I DO elect to have federal income tax withheld from my retirement plan distribution at the rate of % (must be at least 10% of the distribution and must be a whole number). BANK BNRMDI Page 5 of 6

6 IF NO Federal ELECTION IS MADE, THE STANDARD AMOUNT OF 10% WILL BE WITHHELD. (30% will be withheld if you are a non-u.s. citizen residing outside the United States.) State Tax Withholding Election (select one): o I elect NOT to have state income tax withheld from my IRA distribution. o I DO elect to have state income tax withheld: o In accordance with the minimum amount or percentage as determined by the requirements of your state of residence. If your state does not provide a minimum percentage, no state income tax withholding will be withheld. o At the rate of % or (must be higher than the state minimum and must be a whole number) State of Principal Residence (If left blank, we will use your address of record for applying state tax withholding requirements.) Read and Sign I direct that the distribution(s) described above be made from the referenced retirement plan(s). I understand and acknowledge that the USAA entity that is the Custodian (USAA) will act solely on my representations and instructions as set forth in this form, and that USAA will not independently verify whether or not I qualify for the type or amount of distribution or amount directed. I understand and acknowledge that I alone am responsible for the tax consequences that may result from taking such distribution(s) and that I should seek the advice of an attorney or tax adviser regarding my specific situation. X Retirement Account Owner Date (MM/DD/YYYY) BANK BNRMDI Page 6 of 6