Governmental Plans and Required Beginning Dates

by | Mar 6, 2023 | 401(a), 403(b), 457(b) Plans, Plan Administration

Like their private sector counterparts, governmental retirement plans (e.g., defined benefit, 401(a), 457(b), and 403(b)) are all subject to the general retirement plan rules pertaining to “required minimum distributions.” The good news is that several recent law changes have “pushed out” the dates by which participants must commence distribution of their benefits. The bad news is that some of these legislative changes have come so closely on the heels of other changes that people are getting confused about what rules (what required beginning date) apply to them.

The rule prior to the Secure Act. Prior to the enactment of the Secure Act at the end of 2019, the “required beginning date,” or RBD, for governmental plans (i.e., plans without 5% owners) was April 1 of the calendar year following the later of the calendar year in which the employee either attained 70 – ½ or retired from employment.

The rule under the Secure Act. The Secure Act changed the RBD by pushing it out to April 1st following the participant’s attainment of age 72, if a participant had a birthdate on or after July 1, 1949. This change also helped because it eliminated the confusion created by the ½ year aspect of the earlier rule.

Those not affected by the Secure Act. So, governmental plan participants who had terminated employment, and had a birthdate of June 30, 1949, or earlier, would be subject to the rule prior to the Secure Act. In other words, they would have turned 70 – ½ prior to January 1, 2020.

The rule under the Secure 2.0 ActCongress enacted the Secure 2.0 Act at the end of 2022, which further pushed out the RBD. The new RBD under Secure 2.0 is phased-in in two parts:

  • Participants who attain age 72 after December 31, 2022 and before January 1, 2033, will have an RBD based on when they each age 73. That means that participants with a birthdate of January 1, 1951 or later would be subject to this rule.
  • Participants who attain age 74 after December 31, 2032, will have an RBD based on when they attain age 74. This means that participants with birthdays that are on or after January 1, 1959 will be subject to this rule.

The RMD rules contains a number of gotchas, including the fact that if you delay your first RMD payment until April following the “appropriate” birthdate (described above), that will be treated as an RMD for the year of your birthday, and you will still need to take a second RMD later in the year of your initial (prior to April 1) withdrawal.

More importantly, the failure to take a sufficient RMD on a timely basis may be subject to a 25% excise tax penalty on the amount not distributed as required (10% if corrected within two years). There are also special rules for RMDs following the death of the participant.

For all these reasons, it makes sense to seek advice from a qualified adviser concerning these matters.

Jeff Chang is a partner at Best Best & Krieger LLP. He has four decades of experience skillfully evaluating benefit and retirement plan compliance to achieve maximum outcomes for public agency clients throughout California. He can be reached at or (916) 329-3685.

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