As millions of baby-boomers are reaching retirement age, Fidelity Investments
is launching a mutual fund suite that addresses required minimum distribution (RMD) obligations. The Fidelity Simplicity RMD Funds
are designed for investors nearing the age of 70 and a half— that's the age at which Americans are required to begin withdrawing from tax deferred retirement accounts.
| Ken Hevert|
SVP of retirement
"Retirees often struggle to understand when, which assets, what amount and how to take the annually mandated withdrawal from their tax-deferred retirement accounts," states Ken Hevert
, senior vice president of retirement at Fidelity. "If not done correctly, investors may experience a 50% tax penalty on any amount not withdrawn by the annual deadline," he goes on.
Fidelity's new RMD Funds intend to address these concerns by combining age-appropriate investment strategies with an automated payment method. After investing in an RMD Fund, the team at Fidelity automatically calculates and distributes the customer's RMD every year. There are several funds that investors can sign up for depending on their age. For example someone who turned 70 and a half in 2015 would sign up for the Simplicity RMD 2015 Fund. The funds also use glide paths to personalize portfolios over time.
"We’re really excited launching this because it’s innovative and we see it solving a problem that many of our customers face as they approach retirement age," Andrew Dierdorf
, PM on the RMD Funds, tells MFWire
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