PERS 3 – Required minimum distributions begin at 72

Do you have DCP or Plan 3? If so, keep in mind that federal law requires you to withdraw a minimum amount from your investment account when you reach age 72 if you are separated from employment.

The DRS record keeper, Voya, calculates this required minimum distribution (RMD) and pays out this amount to you automatically each year if you haven’t already taken withdrawals to meet your minimum. Doing this helps you avoid the 50% tax penalty that the IRS can impose if the minimum amount is not withdrawn. If you are still contributing to your plan, this withdrawal is optional. If you are a Plan 1 or 2 member who is receiving a monthly pension benefit you don’t need to take an RMD from those plans.

You can calculate your RMD by taking your previous year’s Dec. 31 investment account balance and dividing it by the IRS distribution period based on your age. If you are a member of Plan 3 and DCP, you have two investment accounts that are subject to minimum distribution requirements, and you calculate these separately.

To help with this, you can use the tables found in the RMD section of the DRS website. Find your age in the table. The distribution period is the number you divide your total investment account balance by to get the required minimum amount.

While the required minimum distribution is issued to you automatically, you do have options to make changes to the withdrawal. To find out more, contact the DRS record keeper at 888-327-5596 or visit the RMD Section of the IRS website.