Retired Teachers Chapter News
2007 Required Minimum Distribution
Apr 16, 2007 4:23 PM
Do you participate in the Teachers’ Retirement System’s Tax-Deferred Annuity (TDA) Program? If so, you may be required to receive a distribution from your account this year. The Internal Revenue Service requires TDA participants to begin receiving Required Minimum Distribution (RMD) from their TDA account in the year in which they reach the age of 701/2 if they have separated from service and elected TDA Deferral status.
If you are required to take an RMD, TRS will notify you by mail in early May. This mailing will include a notification letter that shows your 2007 RMD amount and an RMD Election Form (code TD39). TRS will also enclose a copy of a “Required Minimum Distributions for Members” brochure (code 5.4), which will help you better understand the RMD rules.
You may choose how to receive your distribution on the “RMD Election Form” by electing to: (a) receive a payment from TRS in the amount of your RMD, (b) annuitize your entire TDA balance (if you are retired or are retiring), (c) receive a payment from another 403(b) program, or (d) receive a direct withdrawal you have already received in 2007 toward your RMD. If TRS does not receive your election form by the deadline indicated on your notification letter, TRS will issue a payment to you for the entire amount of your 2007 RMD, less any direct withdrawals received in 2007, at the end of the year.
If you are not required to receive an RMD at the time of the mailing in May by TRS because you are in-service and have met the age requirement, TRS will contact you later in the year informing you of your RMD. Since 2007 would be the first year you would be required to take a minimum distribution, the IRS extends the deadline for doing so until the first business day of April subsequent to the year in which you become eligible. This also holds true for those members attaining the age of 701/2 in 2007 who have already separated from service.
For more details about RMD requirements, please refer to IRS Publication 571, Tax-Sheltered Annuity Programs (403(b) Plans) for Employees of Public Schools and Certain Tax-Exempt Organizations, which may be accessed at www.irs.gov. You may also order this publication by calling the IRS at 1-800-829-3676. For tax-related questions, you may call the IRS at 1-800-829-1040. Please see upcoming issues of the New York Teacher for more RMD information, including news about the UFT’s invitation-only annual RMD conference in June for members who are required to receive an RMD for the first time.
