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Fidelity® Sees Record Number of Investors Enroll in Automatic Withdrawals for Annual Minimum Required Distributions From Retirement Savings Plans

  • Living in Retirement
  • IRA
  • Living in Retirement
  • IRA
  • Living in Retirement
  • IRA
  • Living in Retirement
  • IRA

Despite 167 Percent Increase in Enrollment, Nearly Half of Fidelity Customers Have Yet to Take MRD

BOSTON – While many retirees are feeling pressure to meet their holiday shopping and planning deadlines, there's another important deadline they may unknowingly overlook. Fidelity Investments® urges investors age 70 ½ and older to be aware of the approaching December 31 deadline to take the annual minimum required distribution (MRD) from IRAs and 401(k) savings plans. Although it may not be as exciting as picking out the perfect gift for the grandkids, meeting the deadline is critical, as investors may be subject to a tax penalty of 50 percent on the amount not distributed as required if they do not withdraw their full MRD on time.

Almost half (47 percent) of Fidelity's more than 500,000 IRA customers required to take MRDs for tax year 2013 have established an automatic plan to help manage their required distributions, with the number of new automated plans up 167 percent this year. Despite this, nearly half (49 percent) have yet to take the full amount as of December 6, 2013. Additionally, 42 percent have not taken any MRD to date for the year. Generally, investors who are required to take MRDs have until December 31 of that tax year to do so. However, investors taking their MRD for the first time have until April 1 of the following year to make the withdrawal. It’s not uncommon to see MRD activity increase as the deadline approaches, but it can be easy for investors to forget to take them since the deadline coincides with the holidays and other year-end priorities.

"Failing to take an MRD can defeat one of the main advantages of investing in an IRA in the first place –to help reduce taxes," said Lauren Brouhard, senior vice president, Retirement for Fidelity Investments. "An automatic withdrawal program can help investors stay on track with their MRDs by making the calculations and distributions for them at regular intervals. This gives them greater peace of mind that they won’t have to pay unnecessary tax penalties on amounts that are not withdrawn on time."

MRD Resources

To help the millions of investors who must take MRDs, Fidelity.com offers a variety of resources, including Viewpoints articles about taking MRDs, webinars, and an MRD calculator. Fidelity customers can take a one-time distribution online from their IRA to meet their MRD by logging into their account and visiting the Retirement Distributions Center. They also can schedule automatic and regular withdrawals from their Fidelity account(s) directly at the Automatic Withdrawal Center.

For retirement guidance specific to your retirement needs, visit one of Fidelity’s 183 Investor Centers or call 1-800- FIDELITY (1-800-343-3548) for a consultation with an investment professional.

About Fidelity Investments

Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $4.5 trillion, including managed assets of $1.9 trillion, as of November 30, 2013. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.

Fidelity Investments and Fidelity are registered service marks of FMR LLC.
Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.
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