What FRS Members Should Know About Required Minimum Distributions (RMDs)

As Florida Retirement System (FRS) members move deeper into retirement, attention often shifts from earning and saving to managing withdrawals. One of the most common — and most misunderstood — rules retirees face is the Required Minimum Distribution (RMD).

RMDs don’t usually don't apply early in retirement depending on when you retire, but they become increasingly important later on. Understanding when RMDs apply, which accounts are affected, and how they interact with FRS benefits can help retirees avoid surprises and unnecessary complications.

What Is an RMD?

A Required Minimum Distribution (RMD) is the minimum amount the IRS requires you to withdraw each year from certain tax-deferred retirement accounts once you reach a specific age.

The purpose of RMDs is simple:

• Tax-deferred retirement accounts were funded with pre-tax dollars.

• RMD rules ensure those funds are eventually taxed.

RMDs are based on:

• Your age

• Your account balance

• IRS life expectancy tables

🕰️ When Do RMDs Begin?

Under current law:

• RMDs generally begin at age 73 (for individuals born between 1951 and 1959).

• For younger individuals, the RMD age may increase to 75, depending on year of birth.

Your first RMD must be taken by April 1 of the year following the year you reach your RMD age.
All future RMDs must be taken by December 31 each year.

💡 Important: Taking your first RMD late (by April 1) means you’ll take two RMDs in the same calendar year, which may increase taxable income for that year.

Which FRS-Related Accounts Are Subject to RMDs?

✅ Accounts That Are Subject to RMDs

• Traditional IRAs

• Rollover IRAs (including DROP rollovers)

• FRS Investment Plan accounts

• Other pre-tax employer retirement accounts

Accounts Not Subject to RMDs (During the Owner’s Lifetime)

• *Roth IRAs 

• *Roth components of employer plans (under current rules, though plan-specific rules may apply)

Your FRS pension is not an RMD — it’s already taxable income and paid monthly.

*A distribution from a Roth IRA is tax-free and penalty-free provided that the five-year aging requirement has been satisfied and one of the following conditions is met: age 59 1/2, death, disability

How RMDs Interact With FRS Retirement Income

For many FRS retirees, RMDs are layered on top of other income sources, such as:

• Monthly pension payments

• Health Insurance Subsidy (HIS)

• Social Security benefits

• Withdrawals from DROP or Investment Plan assets

This means RMDs can affect:

• Total taxable income

• Tax withholding decisions

Even retirees who don’t need the money must still take the distribution once RMD rules apply.

What Happens If You Miss an RMD?

Failing to take an RMD can result in significant IRS penalties, though recent law has reduced penalties compared to prior years.

• The penalty is calculated as a percentage of the amount that should have been withdrawn.

• Penalties may be reduced or waived if corrected promptly and properly documented.

Because of this, keeping track of RMD deadlines is critical.

Why RMD Planning Matters for FRS Members

Many FRS retirees accumulate substantial balances in:

• DROP accounts

• IRAs

• Investment Plan rollovers

If withdrawals are delayed for many years, RMDs later in life can be larger than expected, potentially pushing retirees into higher tax brackets or increasing Medicare premiums.

This doesn’t mean RMDs are “bad” — but they are something to anticipate and plan around, especially when combined with fixed pension income.

Common RMD Misunderstandings

• “My pension counts as my RMD.”
  It doesn’t. Pension income is separate.

• “I can skip RMDs if I don’t need the money.”
  IRS rules still apply.

• “Only IRAs have RMDs.”
  Employer plans and the FRS Investment Plan are also subject to RMD rules.

• “RMDs start automatically.”
  Some custodians calculate them, but the responsibility ultimately rests with the account owner.

Final Thoughts

Required Minimum Distributions are a normal part of retirement planning, especially for FRS members with significant tax-deferred savings alongside a pension.

Understanding when RMDs begin, which accounts are affected, and how they interact with pension and Social Security income can help retirees stay organized and avoid unnecessary stress later in life.

RMDs aren’t something most retirees need to worry about early on — but they’re important to understand well before they arrive.