RMD Roundup: A Few Key Updates About Required Minimum Distributions For Monsanto Employees

Healthcare Provider Update: Monsanto, a major player in agricultural biotechnology, is covered by various health insurance providers, with many employees accessing coverage through employer-sponsored plans. However, healthcare costs for employers, including those at Monsanto, are projected to rise significantly in 2026. This surge is attributed to a combination of factors such as escalating medical expenses, an expected 8.5% increase in employer-sponsored insurance costs, and possible reductions in federal subsidies for ACA plans. Moreover, with insurers foreseeing double-digit premium increases, many employees could face a substantial financial burden if these trends continue, as both employers and employees adjust to these rapidly increasing costs. Click here to learn more

As we approach the end of 2022, now might be a good time for Monsanto employees to take a closer look at a few developments surrounding required minimum distributions (RMDs) for corporate employees in the United States.

What Are RMDs?

We'd first like to ensure that our Monsanto clients understand the basics— What are RMDs? Once you reach age 72, you are required to take minimum distributions from your traditional IRAs and most employer-sponsored retirement plans. (RMDs are not required from an employer plan if you are still working at the company sponsoring the plan and you do not own more than 5% of the company.) You can always take more than the required amount if you choose.

The portion of an RMD representing earnings and tax-deductible contributions is taxed as ordinary income, unless the RMD is a qualified distribution from a Roth account. We'd like our clients from Monsanto to note that failing to take the full amount of an RMD could result in a penalty tax of 50% of the difference.

Generally, RMDs must be taken by December 31 each year. You can delay your first RMD until April 1 following the year in which you reach RMD age; however, it's important that these Monsanto employees be aware that you will then need to take two RMDs in one year — the first by April 1 and the second by December 31. (If you reached age 73 in the first half of 2022, different rules apply; see below.)

You may want to weigh the decision to delay your first RMD carefully. Taking two distributions in one year might bump you into a higher income tax bracket for that year.

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