Yes. By law, annual withdrawals from retirement plan accounts called Required Minimum Distributions (RMDs) must begin by April 1 in the year following the year when you reach RMD age. SURS is required to follow IRS rules on RMDs.
In the first year an RMD is required, SURS mails a letter to the member providing them with a notification that action must be taken. Some members may have enough service credit to be eligible to elect a lifetime monthly benefit while others with insufficient service credit will be required to take a lump-sum distribution. Failure to comply with RMD requirements may result in the member having to pay penalties and interest. RMD age is as follows: 70.5 for members born before July 1, 1949; 72 for members born July 1, 1949 through December 31, 1950; 73 for members born January 1, 1951 through December 31, 1958 (proposed IRS regulations extend this RMD age for those born during 1959); and 75 for members born on or after January 1, 1960. RMD rules apply to a lump-sum distribution and/or a monthly benefit, whichever the member qualifies for or elects. SURS contacts members as they approach RMD age so that the proper paperwork can be completed.
SURS has initiated a forced RMD process to comply with IRS rules. RSP members are given a choice to elect a distribution option prior to SURS forcing out the RMD payments. Failure to file paperwork will result in the following:
- If a member is not vested for retirement benefits, then the full account balance will be paid out.
- If a member is vested for retirement benefits, the default option will be to initiate a lifetime income benefit utilizing the 100% SURS Lifetime Income Strategy (LIS) option. If the member has a spouse, the default will be to use the 100% joint and survivor option.