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
Insurance transactions conducted across national boundaries. Such transactions occur when the insurance company sells insurance outside the country of the company's domicile. ...
Time frame during which an annuitant makes premium payments to an insurance company. The obligations of the company to the annuitant during this period depend on whether a pure annuity or ...
Organization that underwrites insurance policies. There are two principal types of insurance companies: mutual and stock. A mutual company is owned by its policy owners, who elect a board ...
Act by a person who is terminally ill of cashing in a life insurance policy to pay for the necessary associated illness, medical expenses, and final wishes. This terminally ill person ...
Coverage that will indemnify the insured for the expenses, up to the limits of the policy, if a building is damaged by a peril such as fire, and zoning requirements and/or building codes ...
Detail showing distribution of property coverages written by an insurance company. Illustrates a potential danger of concentration of insured risks. ...
Entitlement of a participant in an employee benefit insurance plan to receive benefits regardless of his or her employment status. ...
Under a general liability policy, a claim by an employer arising when an employee terminated by a supervisor without authority or just cause brings suit against the employer. Such a claim ...
Complete coverage for hospital and physician charges subject to deductibles and coinsurance. This coverage combines basic medical expense policy and major medical policy. ...
Have a question or comment?
We're here to help.