Understanding Required Minimum Distributions (RMD)

Learn about Required Minimum Distributions and how they relate to your TCDRS benefit.

As you plan for retirement, it’s important to understand the IRS rules regarding Required Minimum Distributions (RMDs) from your TCDRS benefits. These rules determine when you need to start receiving your TCDRS benefits.

When do I need to start receiving my distribution?

Step 1: Determine your RMD age.

• Born before 1959: Age 73

• Born in 1959 or later: Age 75

Step 2 – Determine your distribution requirements based on your employment status with your TCDRS employer.

• Still employed: No need to start distributions, regardless of age.

• Stopped working before RMD Age: Begin distributions by April 1 of the year after you reach your RMD age. For example, if your RMD age is 73 and you stopped working at 60, then you will be required to take a distribution by April 1 after the year you turn 73.

• Stopped working after RMD Age: Begin distributions by April 1 of the year after you stopped working for your TCDRS employer. For example, if your RMD age is 73 and you stop working at age 75, then you will be required to take a distribution by April 1 after the year you stopped working.

In January of the year after you reach your RMD deadline, we’ll notify you to take a distribution by April 1. If you do not receive a distribution by the date required, then you will be subject to tax penalties.

What are my benefit options when I take a required distribution?

Your distribution options depend on whether you're vested:

• Vested members can choose to receive a lifetime monthly benefit or withdraw their account balance.

• Non-vested members must withdraw funds.

If you withdraw your account, the IRS calculates an RMD amount based on your RMD deadline. You have the option to rollover all or a portion of your account balance excluding the RMD amount into another qualified plan or take a lump sum distribution with applicable tax withholding. The RMD amount is required to be distributed as a lump sum.

What happens if I do not take the required minimum distribution on time?

It is important to apply as soon as possible, as tax penalties will apply. The longer you wait, the larger the impact will be.

Your TCDRS account will stop earning interest as of your RMD deadline.

If you are vested and choose to retire, your effective retirement date will be March 31 of your deadline year. When you retire, you will get back payments for any months you missed getting your benefit. For example, if you apply for retirement on September 1 of your deadline year, you will get back payments for April - August, with regular monthly payments beginning in September.

Please contact TCDRS Member Services at 800-823-7782 if you have any questions regarding required minimum distributions.

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