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Essential RMD Insights for HNI Retirees: Navigate Your Retirement Withdrawals with Confidence

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Healthcare Provider Update: HNI Corporation offers health insurance coverage to its U.S. employees through medical, dental, and vision plans, along with prescription benefits. The company provides Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) with employer contributions, as well as company-paid life and disability insurance. Preventive care and wellness programs are also included. HNI Corporation Healthcare costs in the United States are projected to continue rising through 2026, with insurers proposing significant premium increases for Affordable Care Act (ACA) plans. A recent analysis found that ACA insurers are seeking a median premium increase of 15% for 2026, marking the largest hike since 2018. This surge is attributed to factors such as the anticipated expiration of enhanced premium tax credits, rising medical costsincluding expensive medications and increased hospital staysand a shift in the risk pool towards higher-cost enrollees. Without the renewal of enhanced subsidies, out-of-pocket premiums for ACA marketplace enrollees could increase by more than 75% on average. Click here to learn more

HNI employees navigating Required Minimum Distributions should strategically consider the timing and method of their withdrawals to optimize tax efficiency and income sustainability throughout retirement,' advises Tyson Mavar from The Retirement Group, a division of Wealth Enhancement Group.

Wesley Boudreaux of The Retirement Group, a division of Wealth Enhancement Group, emphasizes the importance for HNI retirees to understand the flexibility and strategic options RMDs offer, advocating for early consultation to enhance retirement outcomes through tailored planning and execution.

In this article, we will discuss:

1. Overview of Required Minimum Distributions (RMDs): Exploring the mandatory withdrawal rules for HNI retirees and the upcoming age changes.

2. Strategies for Managing RMDs:  Options such as delaying the first RMD and techniques for reducing the taxable impact through various planning methods.

3. Common Misconceptions and Advanced Techniques:  Addressing misconceptions about RMDs and detailing advanced techniques like QCDs and QLACs to optimize financial outcomes.

Required Minimum Distributions (RMDs) are a crucial element of retirement planning for HNI retirees with tax-deferred accounts. Understanding the rules and strategies for managing RMDs can significantly influence your future planning and tax minimization efforts.

Overview of Mandatory Minimum Distributions

For HNI retirees, RMDs are mandatory withdrawals from retirement accounts that must start at a certain age. Currently, RMDs begin at age 73, but changes are set to increase this to age 75 by 2033. This is particularly beneficial for those born in 1960 or later, allowing more growth time for retirement savings before withdrawals become mandatory.

Adaptability in Receiving First RMDs

The timing of your first RMD offers some flexibility. For HNI retirees turning 73 in 2024, the first RMD can be deferred until April 1, 2025. However, this delay requires taking two distributions in the same year—increasing the potential tax impact for that year.

Delaying Seniors' RMDs Who Are Employed


HNI employees who are still working can delay taking RMDs from certain employer retirement plans like a 401(k), provided they don’t own more than 5% of the company. It’s beneficial to consider transferring IRA assets into a 401(k) plan to take advantage of this postponement option.

Receiving Reimbursements in Kind

Another lesser-known option is receiving RMDs in kind rather than cash withdrawals. This method can be advantageous in a down market, allowing HNI retirees to maintain market exposure and potentially favorable tax treatments by transferring securities directly out of retirement accounts.

Misconceptions about RMDs

It's a misconception that RMDs dictate the withdrawal pace of retirement funds. RMDs simply set the minimum withdrawal amount from tax-deferred accounts annually. Surplus withdrawals can be reinvested in taxable accounts or other investments.

Furthermore, it's incorrect to assume RMDs must be taken from each account. IRS rules require the correct total amount to be withdrawn, but strategic planning can determine from which accounts to withdraw based on investment performance and tax implications.

Techniques for Lowering RMDs

RMD impacts can be mitigated through strategies like directing them to a charity via qualified charitable distributions (QCDs), which can reduce taxable income. Additionally, purchasing a Qualified Longevity Annuity Contract (QLAC) within an IRA can defer and reduce RMD amounts, securing income for later retirement years and addressing longevity concerns.

In summary

For HNI retirees, a deep understanding of RMDs is essential for effective retirement planning. Employing strategies such as delaying initial RMDs, accepting in-kind distributions, and utilizing QCDs or QLACs can provide significant tax advantages and align retirement withdrawals with personal financial goals. Consulting with a financial advisor or tax professional is recommended to tailor these strategies to individual needs.

The influence of RMDs on Medicare premiums, particularly through the Income-Related Monthly Adjustment Amount (IRMAA), is another critical consideration. Managing overall income with an RMD strategy can help mitigate potential increases in Medicare Part B and Part D premiums, highlighting the importance of comprehensive financial planning for retirement outcomes.

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Sources:

1. Required Minimum Distributions (RMD) Rules: Key Things Every Retiree Should Know.'  Birch Street Financial Advisors www.birchstreetadvisors.com . Accessed 3 Feb. 2025.

2. Kasper, Bud, CFP®, AIF®. 'RMD Strategies for Before & After Retirement.'  Modern Wealth Management www.modwm.com . Accessed 3 Feb. 2025.

3. 'Navigating Required Minimum Distributions: Key Rules, Changes and Challenges.'  Stadia Financial www.stadiafinancial.com . Accessed 3 Feb. 2025.

4. Armstrong, Reginald A.T. 'Making the Most of Required Minimum Distributions (RMDs) in Your Retirement Strategy.'  Armstrong Wealth Management Group www.armstrongwealth.com . Originally published 14 Oct. 2024. Accessed 3 Feb. 2025.

5. 'RMD Strategies for Before & After Retirement.'  Modern Wealth Management www.modwm.com . Accessed 3 Feb. 2025.

What is the HNI 401(k) plan?

The HNI 401(k) plan is a retirement savings plan that allows employees to save a portion of their paycheck before taxes are taken out, helping them prepare for retirement.

How does HNI match contributions to the 401(k) plan?

HNI offers a matching contribution up to a certain percentage of employee contributions, which helps to enhance the overall retirement savings.

When can I enroll in HNI's 401(k) plan?

Employees can enroll in HNI's 401(k) plan during the initial onboarding process or during the annual open enrollment period.

What are the eligibility requirements for HNI's 401(k) plan?

To be eligible for HNI's 401(k) plan, employees typically need to meet certain criteria, such as being a full-time employee and completing a specified period of service.

Can I change my contribution rate to HNI's 401(k) plan?

Yes, employees can change their contribution rate to HNI's 401(k) plan at any time, subject to plan rules.

What investment options are available in HNI's 401(k) plan?

HNI's 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles to suit different risk tolerances.

Does HNI provide financial education resources for employees regarding the 401(k) plan?

Yes, HNI provides financial education resources and tools to help employees make informed decisions about their 401(k) savings.

What happens to my HNI 401(k) if I leave the company?

If you leave HNI, you have several options for your 401(k), including rolling it over to a new employer’s plan, an IRA, or cashing it out (though cashing out may have tax implications).

Is there a loan option available through HNI's 401(k) plan?

Yes, HNI's 401(k) plan may allow employees to take loans against their vested balance, subject to specific terms and conditions.

How often can I access my HNI 401(k) account statements?

Employees can access their HNI 401(k) account statements online, typically on a quarterly basis, or they can request them as needed.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
HNI Corporation provides both a 401(k) plan and a pension plan for its employees. HNI's 401(k) plan offers a company match where employees can contribute to their retirement savings. The match formula includes 100% matching on the first 1-3% of employee contributions, and 50% matching on the next 2%. This means HNI will match up to a maximum of 4% of an employee’s contributions, as long as the employee contributes at least 5%​ (PlanPerfect). The HNI pension plan is a defined benefit plan that requires employees to meet specific service and age qualifications. Employees typically need to complete one year of service before they are eligible for the pension plan. The pension formula is based on the employee’s final average pay and years of service. The specific name of the pension plan is "HNI Defined Benefit Pension Plan," and it applies to employees who meet the age and service requirements set forth by the company​
In early 2024, HNI Corporation announced a significant restructuring plan aimed at streamlining its operations and reducing costs. The company will be implementing layoffs affecting approximately 5% of its workforce. This move is part of a broader strategy to enhance operational efficiency and adapt to changing market conditions. Given the current economic climate, where companies are re-evaluating their cost structures amidst economic uncertainty, it is crucial for affected employees and stakeholders to stay informed about these changes. Additionally, the restructuring may impact company benefits and pension plans, necessitating close attention to any modifications in these areas.
Stock Options and RSU Acronyms Identify the acronyms used for stock options and RSUs. Provide details on how these options and units are structured and allocated. Company-Specific Details Review HNI Corporation’s stock options and RSUs for the years 2022, 2023, and 2024. Determine who is eligible for these benefits. Source and Documentation Include specific sources and page numbers for verification.
Official HNI Corporation Website Health Benefits Overview: HNI’s official website typically provides an overview of its employee benefits, including health insurance, dental and vision coverage, and wellness programs. Key Terms: Health Savings Account (HSA), Flexible Spending Account (FSA), Premiums, Deductibles, Coinsurance, Out-of-Pocket Maximums. Glassdoor Employee Reviews: Employees often review benefits on Glassdoor, detailing their experiences with HNI’s health insurance plans, including the quality of the plans and any changes over the years. Key Terms: PPO (Preferred Provider Organization), HMO (Health Maintenance Organization), Copays, Network Coverage.
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For more information you can reach the plan administrator for HNI at , ; or by calling them at .

https://www.fidelity.com/learning-center/personal-finance/retirement/company-stock https://www.kitces.com/blog/net-unrealized-appreciation-irs-rules-nua-from-401k-and-esop-plans/ https://creativeplanning.com/insights/financial-planning/how-to-use-the-net-unrealized-appreciation-nua-strategy-in-your-401k/ https://www.planperfectretirement.com/yearly-retirement-plan-contribution-limits/

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