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Beneficiary Distributions

Required Minimum Distribution (RMD) FAQs

Account holders of certain IRAs and qualified plans must begin taking withdrawals from their account when they reach a certain age. These withdrawals are known as Required Minimum Distributions (RMDs) and must follow Internal Revenue Service (IRS) guidelines for timing and amount or a penalty may result.

What is Principal Trust Company's role?

Principal Trust CompanySM, a trade name of Delaware Charter Guarantee & Trust Company, offers our brokerage partners and their clients affordable trust, administration, and compliance services for tax-advantaged brokerage accounts.

We serve as trustee of your retirement plan and are partnered with your broker, who handles the investment needs for your plan. As trustee of your plan, we are required to notify you about your Required Minimum Distribution (RMD).

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Why was I notified in January about my RMD for this calendar year?

The Internal Revenue Service (IRS) requires plan trustees to notify account holders about their RMD requirements by January 31 each year. The deadline for taking your RMD has not changed and will remain December 31. Note: If you turn 70½ in this year, you are required to take an RMD for the tax year, but you may delay your RMD until April 1 of the following year.

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Where do I find my December 31 account value?

You can refer to your year-end statement(s) from last year or contact your investment professional and/or investment company to obtain this information. However, any outstanding rollovers, outstanding transfers, and certain recharacterizations must be added to the year-end account balance before calculating the RMD amount.

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I have more than one IRA. How does this affect my RMD?

You will need to calculate the RMD for each IRA. However, you can combine the total amounts calculated and take the RMD from one or more accounts. Please keep in mind the ability to aggregate your calculated RMD amounts only applies to IRA accounts. However, RMD payments must be distributed from each Qualified Plan separately.

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Am I required to begin taking RMDs from my Roth IRA?

No. Roth IRAs are not subject to the RMD rules until after the account holder's death.

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Am I required to begin taking RMDs from my qualified plan?

A profit sharing plan, a money purchase pension plan, and an individual 401(k) plan are all examples of a qualified plan.

  • If you are working and do not own more than 5% of the company, you can delay taking your first RMD until April 1 following the year you retire.
  • If you own more than 5% of the company, you must take a RMD for the year in which you turn 70½ and each year thereafter.

Unlike IRAs, you must take your calculated RMD amount from each qualified plan separately. You cannot combine them.

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What age do I use to determine my life expectancy?

If you are calculating the RMD for the current calendar year, use the age you were or will be on your birthday during the current calendar year. More about Life Expectancy.

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Will Principal Trust Company help me complete my RMD calculation?

Yes. The quickest method is to use the online RMD Calculator. To complete your current year calculation simply supply your date of birth, your December 31 account value and your spouse's date of birth, if applicable.

You may also call our Client Contact Center at 1.800.209.9010 with questions regarding your RMD.

Finally, if you would like us to calculate and authorize your current year RMD, simply complete Sections 3 through 9 of the Required Minimum Distribution Form. In section 5 you will need to indicate if you want to receive your payment in cash, securities, or both. You will need to update percentage (%) in one of the fields (a through c) in Section 5.

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What life expectancy table is used to calculate my RMD?

Since 2003, the IRS requires nearly everyone to use the Uniform Lifetime Table (PDF: 102 KB) to determine the life expectancy factor. The exception to this rule applies to account holders whose spouse is more than 10 years younger than they are. These individuals may want to use the Joint Life Expectancy Table (PDF: 443 KB) instead as it generally will result in a lower RMD. Both tables can be found in IRS Publication 590 (PDF).

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What happens if I do not take my RMD by the date required?

Failure to withdraw the full RMD amount may result in a 50% penalty tax on the amount not withdrawn.

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What is the five-year rule?

If a beneficiary elects not to receive payments based upon his/her life expectancy, the entire account must be distributed by December 31 of the year containing the fifth anniversary of the account holder's death. The five-year period begins on the last day of the calendar year in which the death occurred. If the five year period includes the year 2009, the distribution was waived in that year, effectively extending distributions over a 6-year period.

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What is the deadline for determining the designated beneficiary?

The date for determining the designated beneficiary is September 30 of the year following the death of the account holder.

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