Internal Revenue Code Section 401(a) (9) requires individuals who are no longer working but have not yet retired to begin receiving required minimum distributions (RMDs) from their retirement plans by April 1 of the calendar year after they reach the federally designated RMD age. Federal legislation determines the RMD age threshold, which is subject to change.
RMDs are mandatory; you cannot opt out.
Current RMD Age
As of January 1, 2023, the RMD age is 73 for individuals who reach age 72 after December 31, 2022 and age 73 before January 1, 2033. (In other words, the RMD applies to those with birthdates from January 1, 1951 to December 31, 1959.)
Prior RMD Ages
From the inception of the RMD rule until December 31, 2019, the RMD age was 70.5, and it applies to individuals with birthdates up to and including June 30, 1949.
The RMD age in effect from January 1, 2020 to December 31, 2022 was 72, and it applies to individuals with birthdates from July 1, 1949 to December 31, 1950.
How the RMD Is Applied
For individuals who are no longer active members of LACERA or a reciprocal retirement system, the RMD beginning date is April 1 of the calendar year after they reach the applicable RMD age.
Active LACERA and reciprocal members who continue to work after reaching the applicable RMD age are not subject to RMDs until April 1 of the calendar year following their employment termination date.
If you have not yet retired and will be subject to the RMD, here are important dates and information to know.
- Your latest eligible retirement date is March 1 prior to the required beginning date.
- If you are a contributory member who wants to withdraw your contributions and forgo a monthly benefit, LACERA must receive a withdrawal application before March 1 prior to the required beginning date. The contributions cannot be withdrawn if the application is received after this date.
- If LACERA does not receive your retirement application or withdrawal application before March 1 prior to the required beginning date, LACERA will file for retirement on your behalf and begin paying an unmodified monthly allowance (provided we have verified your current contact and address information). The first monthly benefit payment will be made by the April 1 required beginning date. You will not be able to change the retirement option once we begin paying you.
Before RMDs Begin: LACERA Will Try to Contact You
If you have not submitted an application to retire or withdraw your contributions within two years of your required beginning date, LACERA will notify you regarding your minimum distributions and options—so make sure LACERA has your current contact information. You can contact us or log in to My LACERA to update your profile.
Regardless of whether you have left County service or joined a reciprocal system, it’s vitally important that LACERA always has your current information so we can contact you or your beneficiaries about various retirement matters and available benefits.
How Mandatory RMDs Could Affect Your Other Benefits
If you postpone your LACERA retirement and begin receiving other income-based benefits such as Social Security or housing that is only eligible to individuals with an income below a certain threshold, you need to be aware that the additional income you will be required to receive when you reach the RMD age could unexpectedly impact your situation if you are not prepared. Remember, you cannot opt out of receiving the RMD, even if it impacts these other benefits. To help prevent unwelcome surprises down the road, it is important to plan ahead and consider future LACERA RMD income when making financial decisions.
If you have any questions about how this may affect you, or if you need any other assistance, contact us or log into your My LACERA account and send us a secure message.