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Distributions in Retirement

Managing your retirement income

Before you begin taking distributions from your retirement savings, we recommend you create a withdrawal plan to ensure you have the income you’ll need throughout your retirement. RPB is here to help you get you started.

It’s important to consider your tax liability—which differs based on the type of RPB contributions you’ve made—when planning for retirement distributions. Distributions from pre-tax contributions are fully taxable at ordinary income tax rates, while qualified distributions from Roth contributions are tax-free. And retired clergy may be able to apply some or all of your housing costs against your pre-tax withdrawals from your RPB account for an additional tax benefit.

Participants who have multiple retirement accounts (i.e., taxable, tax-deferred, and tax-free accounts) should consult with a tax advisor about tax-efficient withdrawal strategies. You’ll want to target income levels that will least affect your marginal tax rate and taxation of social security benefits.

If you also have money in RPB’s Rabbi Trust, there are distribution rules specific to this type of account that you’ll want to take into consideration in your withdrawal planning.

Withdrawal planning considerations

Starting at age 59½, you can take penalty-free distributions even if you’re still working. Here are some general guidelines to help you get started with your retirement planning. But keep in mind that it’s best to create a customized withdrawal plan for your unique situation and periodically reevaluate your strategy to ensure you satisfy your required minimum distributions, minimize your tax burden, and account for any other life changes.

You can roll assets from your other workplace plans into your RPB account. Keep in mind that rollovers between qualified accounts are non-taxable events. Learn more.

Consider all of your retirement income sources when determining how much money you have to work with in retirement. You’ll also be spending differently in retirement—more on some things and less on others—so your annual expenses might be different from when you were working. A common rule of thumb is that you’ll need to replace between 60% – 90% of your annual pre-retirement paycheck for each year you’ll be retired.

You also want to consider how much you can safely withdraw each year. This figure depends on a few factors, including the savings you’ve accumulated in all your investment accounts, market returns, your retirement lifestyle and your life expectancy. One way to calculate how much you’ll need is to plan to withdraw 4% of your retirement savings the first year you retire, then increase that amount by 2% each year after that to account for inflation.

You can use our retirement planning calculator to get started.

The IRS requires that you start taking distributions from your retirement accounts when you reach 72* and are no longer working in the Reform movement. You’ll want to make sure your annual withdrawals satisfy the required distribution amount.

* People who turned 70.5 before December 31, 2019, and began taking their RMD must continue to take their RMD even though they are not yet 72.

If you’re unsure if you’ll have enough savings to last through retirement, there are steps you can take. Start by reducing your projected retirement expenses where possible.

You can also explore working longer, perhaps even into retirement, or contributing more to your retirement plan before retirement. Our research shows that increasing contributions has a greater impact the earlier you do it and—for those nearing retirement—working longer will help stretch your nest egg. Finally, make sure you review all of your retirement income sources and your retirement budget with a financial advisor.

Avoid spending your retirement savings until you reach retirement.

Early distributions will likely have a negative impact on your ability to pay for retirement, and could incur a tax penalty.

403(b) Withdrawal rules and taxes
Pre-tax 403(b) Assets Roth 403(b) Assets

Under Age 59½

Must no longer work for an RPB-eligible employer. 1

Withdrawals are subject to income tax and an IRS 10% early distributions penalty tax.

EXCEPTION: If you’ve terminated your employment and you’re between the ages of 55 – 59½, the distribution is penalty-free. Learn more. Learn more.

Must no longer work for an RPB-eligible employer. 1

Only the portion of the withdrawal that is investment earnings is subject to income tax and an IRS 10% early penalty tax.

EXCEPTION: If you’ve terminated your employment and you’re between the ages of 55 – 59½, the distribution is penalty-free. Learn more.

Age 59½ or older

Starting at age 59½, you can take penalty-free distributions even if you’re still working. Withdrawals are subject to income tax.

Starting at age 59½, you can take penalty-free distributions even if you’re still working. Withdrawals are tax free if the account has been held for at least 5 years.

Required Minimum Distributions

The IRS requires that you start taking minimum distributions when you reach age 72—by no later than April 1 of the following year—unless you’re still working for a RPB-eligible employer and decide to defer your RMD. RPB will calculate and distribute your RMDs for you.

Same2

Disabled

Distributions can be taken without penalty if the disability is total and permanent as defined by the IRS.

Distributions can be taken without penalty if the account has been held for at least 5 years.

Death

In the event of the account owner’s death, the funds are moved into a beneficiary account, and spouses have the same rights as participants. Spouses must begin taking RMDs when the original account owner turns 72.

Non-spouse beneficiaries must withdraw the account balance within 5 years or roll it over into an inherited IRA.

In the event of the account owner’s death, the funds are moved into a beneficiary account, and spouses have the same rights as participants. Spouses must begin taking RMDs when the original account owner turns 72.

Non-spouse beneficiaries must withdraw the account balance within 5 years or roll it over into an inherited IRA. There are no income taxes or IRS penalty if the account was held by the decedent for 5 years.

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  1. Early distributions to a qualified retirement plan while actively employed by an eligible employer may be made on a case-by-case basis. Please refer to our Plan Narrative for more information.
  2. As long as the Roth money is held in the 403(b), an RMD will be required. However, if the Roth balance is rolled over into a Roth IRA, no RMD is required to be taken from Roth IRAs.

RPB distribution options

Once you’re ready to request a distribution, you can choose one or more of our 403(b) distribution options based on your personal financial situation. We recommend that you consult with your financial advisor or tax consultant before finalizing your withdrawal plan.

Systematic withdrawal payments are like receiving a regular paycheck. The money is withdrawn proportionally from the investments in your RPB account and deposited directly into your bank account on a monthly, quarterly, or annual basis. You also choose the day of the month that you want the money deposited. To establish, change, or request special processing for a systematic withdrawal, log in to NetBenefits or contact Fidelity at 1.800.343.0860.

You have the option to take a partial or full distribution of your money and have the distribution sent directly to you or roll over some or all of the distribution to another qualified retirement account. Keep in mind that direct payments are subject to taxation, whereas rollovers are not. Rollover distributions are only allowed from 403(b) accounts, not from Rabbi Trust accounts. Please read the Special Tax Notice on lump sum distributions.

To request a lump sum distribution, log in to NetBenefits and select ‘Loans/Withdrawals' from the Quick Links menu to start the process. If you want your distribution deposited directly in your bank account, make sure to enter or update your bank information in NetBenefits at least 10 business days prior to requesting the distribution.

Rabbi Trust distributions have a specific distribution schedule based on the distribution option you select.

You can purchase an annuity through MetLife with all or some of the money in your RPB 403(b). The MetLife Annuity will provide you with fixed payments for life at group rates; clergy can also apply their parsonage tax exclusion to annuity payments. Contact us to learn more.

Benefits of keeping your money with RPB after you retire
  • RPB is a trusted financial partner of the Reform Movement
  • Personal service and assistance throughout your retirement
  • Access to annual retirement seminars with industry experts
  • Parsonage tax exclusion on retirement distributions for clergy
  • Access to many investment options, including a Jewish values-aligned fund
  • Financial counseling at no additional charge
  • Loans to access money, even in retirement, without tax impact

Required distributions in retirement.

After you reach age 72, the IRS requires you to start taking a minimum distribution amount from your account each year.

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