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
Settlement of a dispute that arises when two or more insurers cover a single loss, and there is a question concerning the amount each is responsible to pay. The companies are bound by the ...
Coverage that goes into effect when an individual's claim reaches a specific threshold selected by the employer who has self-insurance. After this threshold is reached, the policy pays ...
Representative of an insurance company who sells ordinary and industrial life insurance policies. In an effort to move their field forces into the ordinary life business, many industrial ...
Primarily a British association whose membership includes risk managers and insurance buyers, with the emphasis on risk management. ...
Complete coverage for hospital and physician charges subject to deductibles and coinsurance. This coverage combines basic medical expense policy and major medical policy. ...
Judicial rule of evidence under which no reduction in damages awarded by a court is allowed for bodily injury, sickness, illness, or accident merely because the plaintiff has other ...
Individual or organization that provides the mechanism in which financial assets are accumulated for the purpose of paying accrued pension benefits. ...
Measure of the sensitivity of the insurance company's liability for the resultant higher expense rates than charged for in the premium. ...
HEALTH MAINTENANCE ORGANIZATION that restricts to a relatively small amount the number of medical providers from which an HMO member may seek services. Usually, HMO members may select the ...
Have a question or comment?
We're here to help.