To set up your RMD, download and fill out our guide (Opens in a New Window). We must receive this no later than Dec. 20 of the current year.
What are required minimum distributions?
When you turn 73, you’ll have to start taking out a certain amount of money each year from your retirement plan. That amount is a required minimum distribution, or RMD.
Watch to learn more about RMDs and how they work.
Required Minimum Distributions
Video Duration: 2 minutes 31 seconds
Learn about RMDs: Elapsed time 0 minutes 0 seconds [00:00]
Whether you’re approaching retirement or have already reached the milestone, you need to learn about RMDs so you can avoid paying potential penalties to the IRS.
If you’re turning 73 soon and have a tax-deferred retirement account such as a Traditional IRA, SEP-IRA or employer sponsored plan, you’ll soon have to start taking out a certain amount of money each year from your retirement account.
That amount is called a required minimum distribution, or RMD. Unfortunately, certain retirement plans can’t continue to grow tax-free forever. That’s why you must begin taking out your RMD by April 1st in the year after you turn age 73.
How to calculate your RMD: Elapsed time 40 seconds [00:40]
The RMD amount is based on your age, life expectancy and December 31st account value.
To calculate your RMD, you can use our RMD Calculator located on usaa.com. There are other situations that can affect this calculation, like the age of your spouse.
If you don’t take out the correct RMD amount by December 31st amount each year, you may face a 25% penalty tax from the IRS. For example, if your RMD is $10,000, you may be subject to $2,500 in penalty taxes. Plus, you’ll still need to take your RMD and pay ordinary income tax on the amount distributed to you.
The USAA RMD guide: Elapsed time 1 minute 19 seconds [01:19]
In order for us to process your RMD and schedule future RMD payments, you need to complete the USAA RMD Guide. You’ll have to fill out some information about your USAA annuity, beneficiary details and how you want to receive your money.
There are several options for your RMD payouts. You can schedule your payments as systematic withdrawals and choose how often you receive your money, for example, monthly or semiannually. You’ll be able to select this option in the RMD Guide. You also have the option of taking a lump sum and depositing it into your checking or savings account. If you want to elect different federal or state tax withholding, you’ll have to complete the IRS Form W-4R and applicable state tax form.
After you complete the RMD Guide, you can either mail them or send them electronically through our Send Documents to USAA tool on usaa.com or our mobile app.
USAA can help: Elapsed time 2 minutes 17 seconds [02:17]
Dealing with RMDs can be confusing, but our RMD Guide can help you. If you need further help, call us at 800-531-8722 to speak with a financial professional.
End: Elapsed time 2 minutes 31 seconds [02:31]
Types of retirement plans that require RMDs
Here are some of the most common tax-qualified plans that may need RMDs:
- Traditional IRAs
- SEP-IRAs
- Employer-sponsored retirement plans
An RMD may not be required in some situations, including owning a Roth IRA while the owner is alive or working past age 73. Contact us with questions or talk to your tax advisor.
How to calculate RMDs
We’ll give you the RMD amount for the retirement plans you have with us, but you may have others. The IRS usually requires you to calculate separate RMDs for each qualified plan.
When you should take an RMD
For most types of qualified retirement plans, you must take an RMD in the year you turn 73 or choose to delay your first RMD until April 1st of the following year. Then you must take another RMD by the end of that year and each year thereafter.
For example, if you turn 73 in 2024, you must take your first RMD by April 1, 2025. Then you must take an additional RMD again that year — and each year after that — by Dec. 31.
What happens if you don’t take an RMD?
If you miss a withdrawal or take out too little, the IRS may impose a 25% penalty tax on the amount you didn’t take.
For example, say your RMD is $10,000 for the year and you only take $5,000. The IRS may impose a penalty of $1,250 on the remaining $5,000, plus any other taxes you owe on the RMD.
How to take your RMD
Steps to complete How to take your RMD
-
Complete the USAA RMD Guide.
-
Complete required tax forms.
If you want to change or opt out of the standard tax withholding amount, download and fill out IRS Form W-4R (Opens in a New Window).
You can do the same for state taxes, but forms vary depending on where you live. Talk to your tax advisor for more guidance.
-
Send forms back to us.
You can upload forms on usaa.com or our app. Or you can mail them to us. Refer to page 1 of the USAA RMD Guide to learn more.
RMD FAQ
When you complete your RMD Guide, you can select one of these options to get your payment:
- Have the money deposited into your non-IRA annuity or life insurance policy.
- Get a check mailed to you or your charity of choice.
- Set up an Electronic Funds Transfer to your checking or savings account with USAA or other financial institution.
It's a process where you combine RMDs from similar retirement plans into a single withdrawal.
Distributions from qualified retirement plans are reported as ordinary income. Other distributions may not be taxable. Talk to your tax advisor for more information.
They don't stop. You must continue taking an RMD as long as you own a qualified retirement plan.
Need more help?
We understand RMDs can be confusing. Our financial professionals are here for you.