PERAC Memo #53 - 2012: Age 70½ Distribution

Age 70½ Distribution

Summary

PERAC Memo #53/2012 reminds boards of the G.L. c. 32, §12D requirement that inactive, non-retired members who turn age 70½ must begin receiving a distribution by April 1 of the following year, and provides a sample notification letter for use with affected members. Boards should send these notices—recommended in December with a March 1 response deadline—urge members to seek counseling given the complexity of rollover options, and follow up with non-respondents to ensure timely processing before the April 1 deadline; boards may also wish to proactively notify members at age 69.

Full Text

PERAC Memo # 53 / 2012

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 3, 2012

As you know, G.L. c. 32, § 12D brought 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 distribution to all persons who have attained age 70½ during calendar year 201 2 must be made by April 1, 2013, so we recommend that the notices be sent out in December with a return date of March 1, 2013 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.
Your Board may wish to send notification 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 Judith Corrigan at 617-666-4446 ext. 904. Attachment