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
Entitlement of a pension plan participant (employee) to receive full benefits at normal retirement age, or a reduced benefit upon early retirement, whether or not the participant still ...
Endorsement to a business property floater policy that covers neon signs for all perils, both while they are being moved and once they are in place. Signs that are attached to a building ...
Coverage for a lender who has accepted property on the floor of a merchant as security for a loan. If the merchandise is damaged or destroyed, the lender is indemnified. The policy is on an ...
Loss that is not a direct result of a peril. For example, damage to property of a business firm would be a direct loss, but the loss of business earnings because of a fire on its premises ...
Policyholder's equity share of the life insurance company's assets. The share is based on the policyholder's contribution to assets (the company's gross premiums minus cost of insurance, ...
Highly visible form of marketing communication with the public with these objectives: (1) encourage agents and brokers to sell insurance company products, (2) predispose customers to be ...
Trade association located in New York City, consisting of approximately 200 captive insurance companies. The objective of the association is to further the common interests of its members. ...
Coverage in event of damage or destruction of animals that are being shipped. ...
Reduction in automobile insurance rate for a student with a good academic record. Some statistical studies suggest that good students have fewer automobile accidents. ...
Have a question or comment?
We're here to help.