Required Minimum Distribution (rmd)
Definition of "Required minimum distribution (rmd)"
Requirement that an individual must withdraw a minimum sum annually from retirement savings that have accumulated on a tax-deferred basis. This withdrawal must begin by April 1 of the year one reaches age 70 1/2 All deferred tax retirement savings plans (with the exception of the ROTH IRA) are subject to this rule to include the traditional individual RETIREMENT ACCOUNT (IRA), SIMPLIFIED EMPLOYEE PENSION (SEP), SAVINGS INCENTIVE MATCH PLAN FOR EMPLOYEES (SIMPLE PLANS), SECTION 401 (K) PLAN (SALARY REDUCTION PLAN), SECTION 403 (B) PLAN, QUALIFIED PENSION plan, and profit-sharing plan. Withdrawals may be made based on the individual's life expectancy or the joint life expectancy of the individual and the individual's oldest primary beneficiary. The steps for calculating the RMD are:
- determining the total market value of the retirement plan as of December 31 of the year prior to the retirement year.
- determining the life expectancy factor according to the Internal Revenue Service tables.
- dividing the value of the retirement plan by the life expectancy factor.
Popular Insurance Terms
Mistake made during the manufacturing process of a product that results in an inherent defect in the product. This mistake is covered under products and completed operations insurance. ...
Clause in some current ASSUMPTION WHOLE LIFE INSURANCE policies Such as UNIVERSAL LIFE insurance that allows unscheduled premiums to be paid at any time prior to the policy's maturity date, ...
Basis for calculating life insurance premiums and benefits using current interest and mortality rates, rather than historic rates. Current assumptions are critical to interest-sensitive ...
Maximum sum of money that the insurance company will pay, during the time interval that the product liability insurance coverage is in effect, for all product liability-related claims ...
Reinsurance ceded to an insurance company that is a non admitted insurer. ...
One of two bureaus that writes forms and files standard rates for inland marine insurance. The other is the inland marine insurance bureau. ...
Employer, association, labor union, or other group ...
Employee stock ownership plan (ESOP); trust (ESOP) under which an employer received tax credit instead of a tax deduction for contributions. Until passage of the tax reform act of 1986, the ...
Organization that develops and administers educational materials and examinations for the life insurance industry. It awards the fellow, life management institute (FLMI) designation to ...
Have a question or comment?
We're here to help.