Internal Revenue Code Section 401(a) (9) requires individuals who have reached age 72 and are no longer working to begin receiving required minimum distributions (RMDs) from their retirement plans by a specific beginning date.
RMDs are mandatory; you cannot opt out.
How the RMD Is Applied
The required beginning date of RMDs for individuals who are no longer active members of LACERA or a reciprocal retirement system is April 1 of the calendar year after they reach age 72.
Active LACERA and reciprocal members who continue to work after reaching age 72 are not subject to RMDs until April 1 of the calendar year following their employment termination date.
If you have not yet retired and will be subject to the RMD, here are important dates and information to know.
- Your latest eligible retirement date is March 1 prior to the required beginning date.
- If you are a contributory member who wants to withdraw your contributions and forgo a monthly benefit, LACERA must receive a withdrawal application before March 1 prior to the required beginning date. The contributions cannot be withdrawn if the application is received after this date.
- If LACERA does not receive your retirement application or withdrawal application before March 1 prior to the required beginning date, LACERA will file for retirement on your behalf and begin paying an unmodified monthly allowance (provided we have verified your current contact and address information). The first monthly benefit payment will be made by the April 1 required beginning date. You will not be able to change the retirement option once we begin paying you.
Before RMDs Begin: LACERA Will Try to Contact You
If you have not submitted an application to retire or withdraw your contributions within two years of your required beginning date, LACERA will notify you regarding your minimum distributions and options—so make sure LACERA has your current contact information. You can contact us or log in to My LACERA to update your profile.
Regardless of whether you have left County service or joined a reciprocal system, it’s vitally important that LACERA always has your current information so we can contact you or your beneficiaries about various retirement matters and available benefits.
How Mandatory RMDs Could Affect Your Other Benefits
If you postpone your LACERA retirement and begin receiving other income-based benefits such as Social Security or housing that is only eligible to individuals with an income below a certain threshold, you need to be aware that the additional income you will be required to receive when you reach the RMD age could unexpectedly impact your situation if you are not prepared. Remember, you cannot opt out of receiving the RMD, even if it impacts these other benefits. To help prevent unwelcome surprises down the road, it is important to plan ahead and consider future LACERA RMD income when making financial decisions.
If you have any questions about how this may affect you, or if you need any other assistance, contact us or log into your My LACERA account and send us a secure message.