Required Minimum Distributions (RMDs) are amounts that the federal government requires you to withdraw annually from certain tax-deferred retirement accounts. These accounts are called tax-deferred for a reason. Participants accumulate earnings on their contributions tax-free over the years, postponing the payment of taxes, not eliminating them. The purpose of RMD rules is to have these taxable accounts distributed so they are not held tax free over the lifetime of the account owner and then left as an inheritance.

When do I have to take my required minimum distribution?

The federal government recognizes that people are living longer and staying in the workforce longer. As a result, Congress has been adjusting the start date for RMDs. In 2019, the RMD age was raised from 70.5 to 72. With the passing of the SECURE 2.0 Act at the end of 2022, that age was raised to 73. In 2033, that age is set to bump up again to 75.

Birth Year	RMD Beginning Age	First RMD
1950	72	2022
*	–	2023
1951	73	2024
1952	73	2025
1953	73	2026
1954	73	2027
1955	73	2028
1956	73	2029
1957	73	2030
1958	73	2031
1959	73	2032
1960	75	2035

*There were no RMDs that began in 2023 due to SECURE 2.0 changes

What accounts require RMDs?

Not all retirement accounts have RMDs. Original owner Roth IRAs are exempt from RMDs (if certain conditions are met) since taxes were paid when the money was contributed. Roth 401(k) and 403(b) accounts are still subject to RMDs, however, there is proposed legislation to remove this requirement as soon as 2024. The following accounts are still subject to RMDs:

• 401(k)
• 403(b)
• 457
• Traditional IRAs
• Simplified Employee Pension (SEP) IRAs
• Simplified Incentive Match Plan for Employees (SIMPLE) IRAs
• Profit sharing plans
• Other defined contribution plans

You may be exempt from taking an RMD from an employer-sponsored retirement plan if you are still working and less than a 5% owner of the company, either directly or indirectly. Once you begin taking your RMD from an account, you must take them annually for life, even if you go back to work at the same employer. This rule does not affect the RMD status of any other accounts you may have.

How much do I need to withdraw for my RMD?

Each year the amount needed to satisfy your RMD changes according to your age. The calculation starts with taking the year-end balance for each tax-deferred retirement account, finding your age on the IRS Uniform Lifetime Table, and dividing the balance by the number from the chart. Please note that there is a separate chart for IRA owners whose spouses are more than 10 years younger and for IRA beneficiary account owners who are not the spouse of the IRA owner.

You must calculate the amount from each separate account from which an RMD is due. You may be able to aggregate the distribution from your IRAs and only withdraw from one. Defined contribution plans (401(k), 401(b), 457, etc.) require you to withdraw the RMD from each plan separately. Check with your accountant, financial advisor, or the custodian of your account to be sure.

The IRA custodian or retirement plan administrator may calculate the RMD, however, the account owner is ultimately responsible for taking the correct amount.

What happens if I don’t take my RMD?

There are stiff penalties for not taking your RMD in time. The penalty used to be 50% of the RMD amount not taken, however, that was lowered to 25% in 2023. Needless to say, it is important to take your RMDs in the year in which they are due to avoid this excise tax.

Anything else I should know about RMDs?

RMDs are not required from Roth IRAs for the owner of the account. If you are the beneficiary of a Roth IRA, you are subject to RMD rules.

You don’t need to take your RMD as one lump sum, you can take multiple distributions through the year to satisfy the amount.

You can also take more than the RMD amount, however, the excess amount does not apply to future years’ RMDs.

In the first year you are eligible for RMDs, you must take it by April 1 of the year after. Subsequent years after that are due by December 31 of that year. For example, if you turned 72 in 2022, your 2022 RMD was due by April 1, 2023. Your 2023 RMD is due by December 31, 2023.

If the RMD was not taken or, if less than the total due was taken, the penalty may be reduced from 25% to 10% if it is corrected within two years. If there was a reasonable error and steps were taken to remedy the shortfall, the IRS may waive the penalty. Please see your tax advisor for more information.

You are not able to roll your RMD amount into another tax-deferred account. You can invest it in a brokerage or other taxable account. Any gains or losses will be treated as they normally are from these types of accounts.

Required minimum distributions can be complex when you have multiple different types of retirement accounts. Feel free to contact us if you have any questions. We’re always here to help.

Team News and Honors

This spring and summer have been full of celebrations for the HTC team.

 

Amy Remmick (RS Operations and Compliance) and family celebrated their daughter Emily’s wedding in May.

Jan Nelson (Trust Officer) celebrated her 60^th birthday in May. To help celebrate, her family and friends gathered for an evening food and music.

Denise Lies (Senior RS Operations and Compliance) and family celebrated their oldest son Tyler’s graduation from Carlson School of Management – University of Minnesota. 

Jana Samek (Director of Retirement Services)  and family celebrated their oldest daughter Taya’s graduation from West Fargo High School.

Missy Zarak (Trust Officer) and family celebrated granddaughter Jocelyn’s kindergarten graduation from Badlands Elementary School in Watford City, North Dakota.

 

Heartland Trust Company participated in the Hillsboro Dollars for Scholars scholarship program. Congrats to Heartland’s scholarship winner, Cole Hebl! Hillsboro Dollars for Scholars raised over $123,100 for the 2023 scholarship program with 35 graduates receiving scholarships.

 

( Hillsboro Dollars for Scholars President, Jim Murphy, Cole Hebl, Heartland Trust  Vice President and Director of Business Development, Jon  Benson)

 

Stay Connected
Here are two additional ways you can stay connected with HTC. Follow our LinkedIn page and leave us a Google review. We are grateful for all the ways our clients share our story with others.

 

 

 

 

With heavy hearts, we share that Ty Jochim passed away on July 6. Ty joined Heartland in March as a wealth management officer, and we cherish the short time we had with him. His friendly and easygoing nature made him fit in with our team immediately, and we are deeply saddened by his untimely death. Please keep his family and friends in your thoughts.

 

 

 

Amy Remmick

Amy Remmick, Retirement Services Operations and Compliance, has been at HTC for two years. She enjoys going on new adventures with her family. And, she has a never-goes-wrong recipe to share.

Tell us about yourself.

Born and raised in north-central Wisconsin, we moved to Fargo in 1993 with our 2-year-old and 6-week-old daughters. We transferred to the area with Case Corporation, intending to spend our required one year here and then move back to Wisconsin to be near our family. As our year ended, we decided that Fargo was a great place to continue raising our girls and have been here ever since.

What do you like to do in your spare time?

Family is our first priority, and we love going on new adventures together. My husband and I can often be found at the lake spending time on the water or hiking. During the winter months, we spend our weekends ice fishing, winter camping, and following college hockey. We are always on the hunt for something new and fun to do.

Tell us about your favorite life experience.

I witnessed the birth of my first grandchild. I am so blessed and feel that there could hardly be any greater experience than watching your baby give birth to her first baby.

What is your favorite movie/play/book?

The movie Elf. It’s a mindless, goofy holiday movie that simply makes you smile.

What was the first car you owned?

A silver/blue Dodge Omni. I can’t recall the year of the car, but I know that once we finished carving holes in the interior doors and rear window area, the Alpine stereo that we installed was worth more than the car itself. It was the greatest, and we loved driving around town listening to any Rush song.

If you could meet one person, dead or alive, who would it be and why?

My baby brother Patrick. Yes, we’ve met previously, but our family has had so many life experiences after his passing in 2007. I would love to chat with him about all of them. He was the best storyteller, and you always left a visit with him with sore abs from laughing so much. This world needed more people like him in it.

How long have you been at Heartland Trust and what is your favorite part?

I have just rounded the two-year mark. This time has flown by and I feel privileged to be a part of the Heartland Trust Company family. I admire the dedication that this team has to making HTC the best that it can be, and truly feel the support we give to each other is the foundation for our success.

Do you have a favorite recipe you would like to share?

I sure do.

• Pick up your cell phone.
• Download the Food Dudes app.
• Place order.
• Wait for the food to be delivered … and tip well.

Jana Samek

In 1974 Congress passed the Employee Retirement Income Security Act (ERISA) which governs 401(k) plans. It requires any private employer that establishes and maintains a 401(k) plan to meet certain standards in order to benefit from the tax advantages of the plan. One standard that must be met for larger plans is a plan audit.

A plan audit is a review of a company’s qualified retirement plan by a third party Independent Certified Public Accountant. The audit ensures the plan is adhering to Department of Labor and ERISA regulations.  Auditors review information provided on a plan’s Form 5500 and financial statements to verify accuracy. They determine whether the plan fulfills its fiduciary responsibilities and whether an employer is operating its plan correctly. They also identify possible operational errors and potential fraud risks.  

How do you know if your 401(k) plan will require a plan audit?

Administrators of a 401(k) plan subject to ERISA must file an annual report called the Form 5500. This publicly available return provides statistical and financial information about the plan.

The plan will file as either a “large plan” or a “small plan.” Generally, a large plan covers 100 or more eligible participants; a small plan covers less than 100 eligible participants

How those participants are counted, however, is complex.

With the passing of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), the DOL decided to count participants with account balances at the start of the plan year, rather than counting those who are eligible to participate. This affects plans beginning on or after January 1, 2023. This change in counting methodology allows smaller plans that formerly were required to have an audit to waive the requirement. This reduces the expenses for small plans and encourages more small employers to offer a retirement savings plan to their employees.

The DOL regulations also include an 80/120 Rule that allows a plan to continue filing as either a large or small plan even when the participant count fluctuates. For example, if a plan has been filing as a small plan and its participant level rises above 99 but not above 120, it may continue to file as a small plan. If the count does not exceed 120, there is no limit on the number of years an employer may use this exception. Once the plan count exceeds 120 participants at the beginning of the year, it will be subject to the large plan audit requirements.

A plan eligible for the 80/120 rule usually takes advantage of it because it means less costly filing fees and it allows them to avoid the plan audit requirement.

Once a small plan files as a large plan, it cannot subsequently file as a small plan using the transition rule, even if the participant count drops below 100. If the participant count drops below 80, then the plan must file as a small plan. Why is the magic number 100 yet 80 and 120 are the limits? A newly established plan with a participant count greater than 99 must file as a large plan.

For large plans requiring an audit, the audit report must be attached to the completed Form 5500 and must be electronically filed with the IRS by the end of the seventh month following the plan year-end (July 31 for calendar year-end plans). An extension may be filed if needed to extend the filing date by two-and-a-half months behind the regular deadline (October 15 for calendar year-end plans).

If a large plan does not include an independent audit report with the Form 5500 filing, it is treated as if the Form 5500 was never filed. This can result in significant monetary penalties assessed by both the IRS and the DOL and may affect your plan’s qualified status.

 

References:

401(k) Plan Audit Requirement (401k-plan-audit.com)

401(k) Plan Audit Requirement (401k-plan-audit.com)

What To Know about IRS Annual 401(k) Audit Requirement | Human Interest

What is the Large Plan Audit Requirement – Leading Retirement Solutions

Small Plan or Large Plan? Does My Plan Need an Audit? – Hawkins Ash CPAs

ASPPA QKA References

Fact Sheet: Changes for the 2023 Form 5500 and Form 5500-SF Annual Return/Reports | U.S. Department of Labor (dol.gov)

The recent news of Silicon Valley Bank (SVB) and Signature Bank failures should not be too surprising to anyone who understands the timelines and the ways they were conducting their business.

SVB and Signature did not utilize proper risk management and had client bases that were concentrated in riskier industries such as venture capital financing and cryptocurrency. A perfect storm led to the demise of these institutions: rising interest rates, a slowdown in venture capital activity, and clients who reduced their exposure to riskier assets.

As a trust company, we are NOT a broker-dealer. Nor are we a traditional bank that accepts client deposits and lends them out. Our clients’ assets are NOT reflected on our balance sheet. Heartland Trust is entrusted with our clients’ assets and maintains good stewardship on their behalf. As a trust company, we are regulated and routinely examined by the North Dakota Department of Financial Institutions. We are required to have a certain amount of our own assets pledged on our balance sheet. These funds come from our own revenue and commitments from our shareholders.

The assets we manage are ALWAYS our clients’ assets. They are NEVER ours to use in any way shape or form. We are a financial institution that maintains assets and invests funds on behalf of those we work for. This is the way we have done business since our founding and the way we will continue to operate. I get to tell the wonderful story of HTC and how strong our business is. We are proud to have been chosen by the individuals, families, charities, foundations, and businesses that make up our client base. The entire team of professionals at Heartland makes us so strong. We appreciate your confidence in us to help you along life’s journey.

We have celebrated two promotions this year. Jana Samek was promoted to Vice President/Director of Retirement Services. Dustin Sobolik was promoted to Vice President/Director of Investments. Congratulations Jana and Dustin!

HTC team members enjoyed a St. Patrick’s Day Crawl through our office to celebrate the March holiday.

We enjoyed stops at:

• Gary’s Irish Tap
• Amy’s 4- Leaf Trivia
• Mary’s Pub Dublin Sliders Shop
• Kevin’s Clovergreen Country Club
• Jen’s Snacks O’ the Irish, and
• Jill’s Shamrock Hoops

Heartland has some of the most creative team members in town!

Join us in July for Heartland Trust’s semi-annual Market Update webinar. For more details or to get on the invite list, give us a call at 701-235-2002 or send us an email at info@heartlandtrust.com. Dustin Sobolik, Director of Investments at HTC, will give a 45-minute review of the market in 2023 and what to watch for the rest of the year.

Maureen Jelinek joined Heartland in December as our Executive Vice President / Chief Operating Officer. She has already become a cherished team member. She has extensive experiences in the financial industry – and you won’t want to miss her recipe for Green Enchilada Chicken Soup.

Tell us about yourself.

I am originally from Grand Forks. I graduated from the University of North Dakota where I studied business administration and marketing. In 1997, I moved to Fargo when I was promoted to Manager of Deposit Acquisition and Operations at Gate City Bank.

I worked at Gate City Bank for 27 years. Most recently I served as Executive Vice President, overseeing information technology, information security, project management, business intelligence, deposit acquisition and operations, digital banking, call center, compliance and loan servicing.

My husband Doug and I have three kids, two grandkids, and two dogs.

What do you like to do in your spare time?

I love to support and cheer for my kids at their activities. I also like to relax in the boat at the lake and make memories. I love comedy whether it’s watching comedians and comedy shows or catching the latest funny movie. I love to laugh!

Tell us about your favorite life experience

My favorite life experience is being a mom. I’m amazed at how unique each child is even when they are raised in the same environment. I enjoy seeing the world through their eyes.

What is your favorite movie/play/book?

The Other Sister, a romantic comedy.

If you could meet one person, dead or alive, who would it be and why?

I would want to meet my paternal grandpa. He died prior to my parents’ engagement. My dad shared wonderful memories of him and emulated the many admirable attributes he talked about such as integrity, kindness, respectful, loving, loyal, encouraging, supportive, strong work ethic, etc.

What is your favorite part about working at Heartland Trust?

The commitment of all team members to the company mission, vision, and values. This is an amazing team of professionals and a truly enjoyable culture!

Green Enchilada Chicken Soup
(Thank you, Pinterest, with a few tweaks!)

2½ pounds of shredded boneless skinless chicken breasts or thighs (I use a rotisserie chicken for great flavor and to save time!)

28 ounces green enchilada sauce

24 ounces chicken stock

1 cup half-and-half

2 cups monterey jack cheese shredded

4 ounces cream cheese cubed and softened

4 ounces green salsa verde

4 ounces diced green chiles

1 bunch of chopped cilantro

Salt and pepper to taste

1. In a large stockpot, add chicken and chicken stock. Simmer until chicken is done and can easily be pulled apart. Remove chicken and shred. (Skip this step if using rotisserie chicken.)
   
   
2. To chicken stock, add shredded chicken (or diced rotisserie chicken) and remaining ingredients. Stir and heat soup until it is warm, and the cheese is melted.
   
   
3. You can make this as mild or spicy as you prefer by using various heat options in the ingredients (mild to hot), adding more green salsa, adding green chili hot sauce or adding diced jalapenos.
   
   
4. Serve with additional green salsa, hot sauce and sour cream on the side. We prefer diced green onions. Enjoy!

Last year was unique on many levels. The stock and bond markets had some of their worst years on record. Interest rates hit a 12-year high and the job market saw a lot of movement while unemployment remained low. It was a stressful and confusing year but, like all bad things, it came to an end and a new day started. The bond market has begun to rebound, the stock market is already up almost 7% as of this writing, and we have more or less returned to normal since COVID first flipped our lives upside down three years ago.

We experienced many changes at Heartland Trust in 2022 as well. We completed our conversion to Fidelity on our wealth management side. We added several new employees, including a chief operating officer who makes sure our business operations are running as smoothly as possible. We also promoted several team members. On top of that, we kicked off an office remodel project to add more workspace and to update other areas of the building.

While I am not disappointed to see 2022 gone, I am reminded of how our entire team came together. Through all of the challenges, we kept our commitment to deliver personalized service to help our clients reach their financial goals.

I am excited for what this year will bring. And I know we will stay dedicated to our company mission of serving the people, companies, and communities we work for. We wish everyone a happy and successful 2023!

• Our team continues to grow. We are excited to announce the following promotions and new hires.
Jana Samek was promoted to Director of Retirement Services.

We recently welcomed two new employees to our team: Jennifer Schmidt, Administrative Associate-Personal Trusts; and Maureen Jelinek, Chief Operating Officer

• We embraced the holiday spirit with our team Ugly Sweater Christmas Celebration. The entries were festive and fun. Congratulations to Amy Remmick (left) who won the Most Creative award and Steve Halverson whose sweater was voted the Ugliest.

• We are thrilled that we were able to participate in the 2023 Giving Hearts Day. Each team member picked a charity in which HTC made a donation in their honor. Here are the charities we supported:

• Congratulations to Denise Lies who celebrated 30 years with HTC on January 14. Denise is our Senior Retirement Services Operations and Compliance. Congratulations, Denise!

Tim Rensch joined us in July as our Retirement Services Relationship Manager. He likes to spend time outside and read – and he’s already become a valuable part of our team. 

Tell us about yourself.
I am a native of Garrison, North Dakota, and moved to Fargo in 1993 to start college at North Dakota State University. I graduated with a BS in accounting and, after college, started my career in hotel management. In 2008, I started my first job in the financial services industry.  

What do you like to do in your spare time?
I like to go camping and hiking with my wife and dogs. I also like to ride my bicycle, kayak, golf, and read.  

Tell us about your favorite life experience.
I don’t have a single favorite life experience. I look at my past experiences, good and bad, as something to learn from so I am moving forward as the best possible person I can be.  

What is your favorite movie/play/book?
My favorite book is the next one I’m going to read. I love to learn new things and to be able to look at situations through the perspective of others. Books and movies are great opportunities to expand my perspective and awareness, but I don’t get hung up on a favorite. Each one has given me a different, thought-provoking experience. 

What was the first car you owned?
The first car I owned was a 1980 Pontiac 6000.  

How long have you been at Heartland Trust?
I started at HTC on July 13, 2022. 

What is your favorite part about working at Heartland Trust?
Heartland Trust is a place that treats people with respect and dignity. This holds true in the way the company treats employees, employees treat customers, and co-workers treat each other. Companies often spend a lot of time promoting their corporate culture, but I’ve found the companies with the best corporate culture show it and that is certainly true of Heartland Trust.