April 1: Deadline for 2019 Required Distributions from Nonqualified Deferred Compensation 457(b) Plans

Participants in nonqualified deferred compensation 457(b) plans who are no longer working, reached age 70½ in 2019, and chose to delay their first required minimum payment until 2020, must take their distribution by April 1. Participants who do not withdraw the full 2019 required minimum distribution by April 1, 2020, could be subject to a penalty equal to 50% of the amount that was not withdrawn.

The required minimum distribution rules apply to both employee and director nonqualified 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.

Additionally, participants who chose to delay taking their 2019 distribution until April 1, 2020, must take both their 2019 and 2020 required distributions during the 2020 tax year. The deadline to withdraw the 2020 required minimum distribution is December 31, 2020.

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.