When you turn age 72 and are retired, the law mandates that you begin to take a required minimum distribution (RMD) from your Plan account. The RMD is calculated using your account balance as of the last day of the previous year.
- If you turned 72 in the calendar year, you have until April 1st in the following calendar year to take your RMD for the current tax year. If you wait until January 1st, you will need to take another RMD by December 31st of that year and will be taxed on both in that year. You will be sent a letter in April each year that will provide you with your RMD amount for that year. If you wish to change your withholding on your payment, please contact the City of Milwaukee Deferred Compensation Plan Service Center at 1-844-360-6327
- If you are still employed, and you have already begun taking your RMD, you may choose to stop receiving distributions until you retire. If you are receiving installment payments, the Plan will continue these payments unless you notify the City of Milwaukee in writing to discontinue.
- If you are retired and do not take the RMD in a given year, you will have a penalty of 50% of the amount that should have been distributed.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, a response to the public health crisis and associated economic fallout in the wake of COVID-19, was passed on March 27, 2020. One of the provisions of the CARES Act includes a waiver of required minimum distributions (RMDs) for the entire 2020 calendar year from accounts within 401(a), 401(k), 403(b) or governmental 457(b) plans, or a traditional IRA. You may still request a distribution, however, RMDs will not automatically be paid in 2020.