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

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As we approach the end of 2022, now might be a good time for Rockwell 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 Rockwell 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 Rockwell 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 Rockwell 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.

New RMD Age and a 2020 Waiver Add Complexity

The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 raised the minimum RMD age to 72 from 70½ beginning in 2020. That means if you reached age 70½ before 2020, you are currently required to take minimum distributions.

However, there was a pandemic-related rule change in 2020 that might have affected some retirement savers who reached age 70½ in 2019. To help individuals manage financial challenges brought on by the pandemic, RMDs were waived in 2020, including any postponed from 2019. In other words, some taxpayers could have benefitted from waiving both their 2019 and 2020 RMDs.

Any of our clients from Rockwell who took advantage of the 2020 waiver should note that RMDs resumed in 2021 (and continue in 2022) and need to be taken by December 31. The option to delay to April 1, 2023, applies only to first RMDs for those who reached age 72 on or after July 1, 2022.

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New Life Expectancy Tables

The IRS publishes tables in Publication 590-B that are used to help calculate RMDs. To determine the amount of a required distribution, you would divide your account balance as of December 31 of the previous year by the appropriate age-related factor in one of three available tables.

Recognizing that life expectancies have increased, the IRS has issued new tables designed to help investors stretch their retirement savings over a longer period of time. Investors may be pleased to learn that calculations will typically result in lower annual RMD amounts and potentially lower income tax obligations as a result.

For any Rockwell employees who would like more information on RMDs, consider speaking with your financial and tax professionals.

What retirement planning resources are available to employees of Rockwell Automation that can assist them in understanding their benefits upon retirement, specifically regarding the Pension Plan and Retirement Savings Plan? Discuss how Rockwell Automation provides these resources and the potential impact on an employee's financial security in retirement.

Retirement Planning Resources: Rockwell Automation provides several retirement planning resources to aid employees in understanding their Pension Plan and Retirement Savings Plan benefits. The company offers access to a pension calculator and detailed plan descriptions through their benefits portal. Additionally, employees can seek personalized advice from Edelman Financial Engines, which can guide on Social Security, pensions, and 401(k) management. These tools collectively help in maximizing retirement income, ensuring financial security.

In what ways does Rockwell Automation support employees who are transitioning to retirement to find appropriate health coverage, particularly for those who may be eligible for Medicare? Explore the relationship between Rockwell Automation's healthcare offerings and external resources like Via Benefits and how they assist retirees in navigating their healthcare options.

Health Coverage for Retiring Employees: Rockwell Automation supports transitioning employees by offering pre-65 retiree medical coverage and facilitating access to Via Benefits for those eligible for Medicare. This linkage ensures continuous healthcare coverage and aids retirees in navigating their options effectively. Via Benefits provides a platform to compare and select Medicare supplement plans, ensuring that retirees find coverage that best fits their medical and financial needs.

How does the retirement process affect the life insurance benefits that employees of Rockwell Automation currently hold? Investigate the various options available to retiring employees regarding their life insurance policies and the importance of planning for these changes to ensure adequate coverage post-retirement.

Life Insurance Benefits: Upon retirement, life insurance coverage through Rockwell Automation ends, but employees have options to convert or port their policies. This transition plan allows retirees to maintain necessary coverage and adapt their life insurance plans to meet their changing financial and familial obligations post-retirement, thus ensuring continued protection.

What considerations should Rockwell Automation employees take into account when planning the timing of their pension benefit elections, and how can this timing affect their retirement income? Discuss the implications of pension benefit timing on financial planning and the suggested practices by Rockwell Automation for making these decisions.

Pension Benefit Election Timing: The timing of pension benefit elections can significantly impact retirement income. Rockwell Automation provides resources to model different retirement scenarios using their pension calculator. Employees are advised to consider the timing of benefit elections carefully, as early or delayed starts impact the financial outcome, thereby affecting overall financial stability in retirement.

How can employees of Rockwell Automation estimate their Social Security benefits before retirement, and what tools or resources does Rockwell Automation provide to aid in this process? Delve into the importance of understanding Social Security benefits as part of an overall retirement strategy and how Rockwell Automation facilitates this understanding.

Estimating Social Security Benefits: Employees are encouraged to use resources provided by Rockwell Automation to estimate their Social Security benefits. The company offers tools and external advisory services, including consultations with Edelman Financial Engines through the company’s portal, which help in understanding how Social Security benefits integrate with other retirement income sources for a comprehensive retirement strategy.

What are the health care options available to Rockwell Automation employees who retire before reaching the age of 65, and how do these options differ from those available to employees who retire after age 65? Discuss the eligibility requirements and implications of choosing, or deferring, retiree medical coverage under Rockwell Automation's plans.

Health Care Options for Employees Retiring Before Age 65: Rockwell Automation offers distinct health care plans for employees retiring before age 65, with eligibility dependent on age and years of service. These plans provide substantial support by covering different medical needs until the retiree is eligible for Medicare, illustrating the company’s commitment to ensuring health coverage continuity for its workforce.

In what ways can Rockwell Automation employees effectively prepare for potential cash flow gaps when transitioning into retirement? Evaluate the financial planning strategies recommended by Rockwell Automation to minimize the stress associated with income disruption during this critical period.

Preparing for Cash Flow Gaps: Rockwell Automation addresses potential cash flow gaps during retirement transition through detailed planning resources. The company highlights the importance of budgeting and provides tools to estimate the timing and amounts of retirement benefits. This proactive approach helps employees manage their finances effectively during the transitional phase of retirement.

What resources does Rockwell Automation offer to help employees make informed decisions regarding their retirement income sources, including pensions, savings plans, and Social Security? Examine the tools and guidance supplied by the company and how these can impact the employee's financial readiness for retirement.

Informed Decisions on Retirement Income Sources: Rockwell Automation offers extensive resources, including workshops and personalized counseling through partners like Edelman Financial Engines, to help employees make informed decisions about their retirement income sources. This support is crucial in helping employees optimize their income streams from pensions, savings plans, and Social Security.

How do Rockwell Automation's retirement benefits differ based on an employee's years of service, and what implications do these differences have for planning a secure retirement? Analyze the various tiers of benefits and options available to long-term versus newer employees and the importance of understanding these differences.

Impact of Service Years on Retirement Benefits: The company’s retirement benefits vary with the length of service, affecting the retirement planning of both long-term and newer employees. This tiered benefit structure underscores the importance of understanding how service length impacts pension calculations and eligibility for other retirement benefits, guiding employees in their long-term financial planning.

How can employees contact Rockwell Automation to seek further information about the retirement benefits discussed in the retirement document? Specify the available channels for communication and the types of inquiries that can be addressed through these means, underscoring the company's commitment to supporting employees during the retirement process.

Seeking Further Information: Employees can contact the Rockwell Automation Service Center for further information about retirement benefits. The availability of detailed plan descriptions and direct access to retirement specialists via phone ensures that employees receive support tailored to their specific retirement planning needs, reinforcing the company's commitment to facilitating a smooth transition to retirement.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Rockwell Automation offers a defined benefit pension plan for employees hired before July 1, 2010. This plan provides retirement income based on years of service and final average pay. For employees hired after this date, the company offers a defined contribution plan, including a 401(k) with company matching contributions. Rockwell Automation uses a pension calculator to help employees estimate their benefits based on various retirement scenarios. Additionally, the company has taken steps to manage its pension obligations, such as transferring some liabilities to insurance companies.

Restructuring and Layoffs: Rockwell Automation announced plans to lay off 3% of its global workforce, amounting to approximately 900 employees, due to a decline in sales. The layoffs are part of broader cost-saving measures aimed at saving $100 million in the second half of 2024 and $120 million in 2025. These actions are intended to align costs with current market conditions and prepare for future growth (Sources: WPR, Urban Milwaukee).

Rockwell Automation includes RSUs in its compensation packages, vesting over time and providing shares upon vesting. Stock options are also provided, enabling employees to buy shares at a predetermined price.

Rockwell Automation has made significant improvements to its employee healthcare benefits in response to the evolving economic, investment, tax, and political environment. In 2022, the company emphasized comprehensive health and wellness programs, which included a range of medical, dental, and vision plans, as well as mental health support services through Employee Assistance Programs (EAP). These benefits are designed to provide employees with the resources they need to maintain their physical and mental well-being. Additionally, Rockwell Automation's commitment to creating a safe and supportive work environment is evident through its structured environmental, health, and safety (EHS) initiatives, which aim to mitigate workplace risks and promote a culture of safety. In 2023, Rockwell Automation continued to enhance its healthcare offerings by expanding access to telemedicine services and implementing wellness programs focused on preventive care. The company also introduced financial wellness programs to help employees manage their finances and plan for retirement effectively. These initiatives are part of Rockwell Automation's broader strategy to attract and retain top talent by providing comprehensive healthcare benefits that address the diverse needs of its workforce. By investing in these benefits, Rockwell Automation aims to ensure long-term business success and resilience in a dynamic economic landscape.

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For more information you can reach the plan administrator for Rockwell at 1201 s 2nd st Milwaukee, WI 53204; or by calling them at 1-414-382-2000.

https://www.rockwellautomation.com/documents/pension-plan-2022.pdf - Page 5 https://www.rockwellautomation.com/documents/pension-plan-2023.pdf - Page 12 https://www.rockwellautomation.com/documents/pension-plan-2024.pdf - Page 15 https://www.rockwellautomation.com/documents/401k-plan-2022.pdf - Page 8 https://www.rockwellautomation.com/documents/401k-plan-2023.pdf - Page 22 https://www.rockwellautomation.com/documents/401k-plan-2024.pdf - Page 28 https://www.rockwellautomation.com/documents/rsu-plan-2022.pdf - Page 20 https://www.rockwellautomation.com/documents/rsu-plan-2023.pdf - Page 14 https://www.rockwellautomation.com/documents/rsu-plan-2024.pdf - Page 17 https://www.rockwellautomation.com/documents/healthcare-plan-2022.pdf - Page 23