Simplicity RMD Fund FAQs

The Simplicity RMD Funds have target dates that reflect the year in which an investor turns 70* and begins taking required minimum distributions (RMDs). However, customers can choose a different strategy based on other considerations including personal goals for cash/income needed in retirement, inflation; and risk tolerance, if they prefer.

The Simplicity RMD Funds are actively managed, applying Fidelity's investment and research capabilities in several areas. The funds invest in multiple Fidelity-managed mutual funds which are primarily actively managed and emphasize security selection in seeking to add value over time. Additionally, the fund managers have flexibility to apply active allocation decisions by incrementally increasing or decreasing positions relative to a fund's specific strategic or benchmark asset allocation.

Fidelity Simplicity RMD Funds are designed to help take the guesswork out of the required minimum distribution (RMD) process and assist millions of Americans who are approaching age 73 and above who turned age 70 in or within a few years of Simplicity RMD's horizon date. The funds combine an age-appropriate and professionally-managed investment option with an optional automated payment method designed to manage and satisfy annual RMD requirements on the investor's behalf.

The Simplicity RMD Funds invest in a combination of Fidelity domestic equity funds, international equity funds, bond funds, and short-term funds (underlying Fidelity funds) according to a "neutral" asset allocation strategy that adjusts over time until it reaches an allocation similar to that of the Simplicity RMD Income Fund. Each Simplicity RMD Fund name includes a date, which can help investors choose the fund that most closely aligns to the year they turn 70. The foundation of the funds is the glide path, which is the strategic asset allocation designed to balance investment returns and risk in conjunction with an RMD.

Investors are not required to set up automatic withdrawals, but it is the easiest way to satisfy RMDs. Once an automatic withdrawal plan is set up, Fidelity will distribute the RMD each year based on the schedule chosen by the investor (monthly, annually, custom), helping meet IRS requirements and deadlines.

For the investors who prefer to manage withdrawals on their own, one-time distributions are an option. It's important to remember that the penalty for a missed RMD is 25% of the amount not taken on time—a potentially costly mistake if the distribution is forgotten.

Automatic withdrawals can be set up at the individual account level or an investor can elect to set up a plan that includes multiple IRAs. The Simplicity RMD Fund itself will not satisfy RMDs without taking a withdrawal.

Fidelity automatic withdrawals can only be established for Fidelity accounts. If an investor has an IRA outside of Fidelity, a one-time withdrawal can be requested to satisfy the RMD from the Fidelity IRA.

A required minimum distribution is the minimum amount an investor must withdraw in a given year, but there are no rules preventing additional distributions from being taken if cash flow is needed. Distributions from retirement accounts are generally included in taxable income so investors should consider speaking to a tax advisor about which accounts to take distributions from and the timing of their withdrawals.

Yes, Fidelity's automatic withdrawal process allows the investor to choose from a variety of payment options, including depositing the distribution into a nonretirement brokerage account.

If your current plan is set up for proportional withdrawals, this fund will be added to that withdrawal plan automatically. If your plan is set up as a fixed percentage plan, you will need to adjust the plan to take distributions from the Simplicity RMD Fund or change your plan to proportional.

No, but if you hold additional positions in your account, consider having your RMDs taken proportionately from your eligible positions.