April 1: Initial 2018 RMD Deadline for Deferred Compensation 457(b) Plans for Tax-exempt Co-ops
Plan participants who are no longer working, reached age 70½ in 2018, and chose to delay their first payment until 2019, must take their initial required minimum distribution by April 1. Participants who are required to but do not withdraw the full 2018 required minimum distribution by April 1, 2019, could be subject to a penalty equal to 50% of the amount that was not withdrawn.
Additionally, participants who chose to delay taking their 2018 required minimum distribution until April 1, 2019, must take both their 2018 and 2019 required minimum distributions during the 2019 tax year. The deadline to withdraw the 2019 required minimum distribution is December 31, 2019.
The required minimum distribution rules apply to both employee and director deferred compensation plans governed by IRC Section 457(b) and sponsored by tax-exempt cooperatives and public utility districts. These plans include:
- Executive Compensation 457(b) Plans;
- Global Executive Compensation Plans; and
- Governmental Deferred Compensation 457(b) Plans.
As a reminder, the required minimum distribution for one of these plans must be taken from the plan and cannot be satisfied by a withdrawal from an IRA or a qualified retirement plan (like a 401(k)). Participants should contact their personal financial and/or tax advisors for help in determining the amount of the required minimum distribution.
Questions? Please contact the Deferred Compensation Program team by email at deferredcomp@nreca.coop or by phone 703.907.6375.