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Fidelity launches first mutual funds to simplify RMD process


With the first full wave of baby boomers due to reach the required minimum distribution (RMD) age of 70½ this year, Fidelity Investments has launched the Fidelity Simplicity RMD Funds.

By 2018, millions of Americans will begin taking an RMD from their tax-deferred retirement accounts, such as traditional individual retirement accounts (IRAs), each year.
Designed to help take the guesswork out of determining a suitable allocation for assets that are subject to RMDs, Fidelity’s industry-first suite of mutual funds combines an age-appropriate and professionally-managed investment strategy with an optional automated calculation and distribution method to satisfy annual RMD requirements on the investor’s behalf.
“Retirees often struggle to understand when, which assets, what amount and how to take the annually mandated withdrawal from their tax-deferred retirement accounts,” says Ken Hevert, senior vice president of Retirement at Fidelity Investments. “If not done correctly, investors may experience a 50 per cent tax penalty on any amount not withdrawn by the annual deadline.
“Further, once the RMD has been made, investors find themselves unsure of whether or not they are being too conservative or too aggressive with the remaining investments. The Fidelity Simplicity RMD Funds complement our suite of automatic RMD services, and will provide a simple and innovative solution for investors to help alleviate many of the concerns around taking annual RMDs,” says Hevert.

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