PERAC Memo #46 - 2009: Age 70½ Distribution
Age 70½ Distribution
View original on MA State Library →Summary
This memo addresses the new requirement under G.L. c. 32, §12D that inactive, non-retired members who reach age 70½ must begin receiving a distribution by April 1 of the following year, consistent with federal RMD rules, and provides a sample notification letter for this purpose. Boards must notify affected members (with those already over 70½ in 2009 needing distributions by April 1, 2010) and are encouraged to urge members to seek counseling given the complexity of rollover options rather than simply distributing forms. Going forward, boards should send annual notices to members turning 69 to alert them of their upcoming RMD deadline and encourage timely application.
Full Text
MEMORANDUM #46, 2009 M E M O R A N D U M TO: All Retirement Boards FROM: Joseph E. Connarton, Executive Director RE: Age 70½ Distribution DATE: December 8, 2009 As you know, the enactment of G.L. c. 32, § 12D (Section 15 of Chapter 21 of the Acts of 2009) brings the Massachusetts Retirement Systems into compliance with the federal requirement that persons who attain age 70½, who are not receiving a retirement allowance and who are not employed must begin taking a distribution from the System by April 1 of the year following the year they attain age 70½. Attached is a sample letter that Boards can use to advise affected members of this requirement. The options available to these members can be quite complicated, especially those provisions that apply to rollovers. As a result, we are suggesting that the members be urged to contact the Board for counseling. We do not suggest that a set of all of the possible forms be sent to members without either formal counseling or a specific request. The initial distribution to all persons who have attained age 70½ during calendar year 2009 (or who were older than 70½ in 2009) must be made by April 1, 2010, so we recommend that the notices be sent out in December with a return date of March 1, 2010 in order to allow time for processing of payments. Boards may wish to send follow-up notices or make other efforts to contact members who do not respond in a timely manner. In future years, notification should be made near the end of the year during which an individual attains age 70½, is not receiving a retirement allowance and is no longer employed by a governmental employer. In addition, we recommend that an annual notification be sent to members in the year they reach age 69 advising them of their upcoming required minimum distribution deadline and urging them to promptly apply for benefits in order to avoid tax penalties and to ensure they have the most favorable opportunity for rollovers. If you have questions, please feel free to contact Barbara Phillips at 617-666-4446 ext. 902 Attachment