401(k) Pension Plan Required Minimum Distribution Notifications

NRECA is mailing personalized required minimum distribution (RMD) notices to all 401(k) Plan participants who are:

• Age 70½ or older and not currently working for a co-op; and
• Have not yet withdrawn their annual RMD as calculated by the Internal Revenue Service’s “Uniform Lifetime Table.”

Two versions of this letter are being mailed. An initial notice is sent to participants who will turn age 70 ½ in the current year and need to take an RMD for the first time. The second version, the ongoing notice, serves as a reminder to those participants who will need to make an RMD in the current year.

Both notification letters explain the IRS requirement, timing of events and the RMD process. Participants may elect direct deposit over a paper check and whether or not they wish to have federal taxes withheld. Generally, RMDs must be withdrawn by December 31 of each tax year. However, participants receiving an initial notice may elect to defer their initial RMD until April 1 of the year after reaching age 70½. Participants choosing to delay their initial RMD until April 1 of the next year will be taking two RMDs during that calendar year, potentially increasing their tax obligation for that year.

The notification letters include a section where participants may request a withdrawal from their account and can indicate how they would like the request processed. If NRECA does not receive a withdrawal request from the participant by December 1, 2014, the amount of the outstanding RMD will automatically be issued as a check and mailed to the participant’s address prior to December 31.

Retirement plan participants (not plan sponsors) are responsible for taking the correct amount of RMDs on time every year from their accounts. By having a process in place for monitoring and automatically issuing annual RMD payments, our plan participants are less likely to be hit with a penalty for failing to meet IRS rules.

This year marks a transition to the mailing of written RMD notices from our previous practice of making outbound telephone calls to affected participants. NRECA will now only make outbound calls to explain 401(k) Plan distribution options and requirements to surviving spouses and beneficiaries of deceased participants.

For questions about the RMD notification process, contact the Member Contact Center at 1.866.673.2299, or email contactcenter@nreca.coop.