RMDs must be taken by Dec. 31 or account holders face a steep penalty.
The end of the year is a busy time, but among the long list of things to do should be taking a required minimum distribution – for those who haven’t already done so, are at least 72 years old and have a retirement account.
Account holders must begin taking required minimum distributions, or RMDs, at age 72. Investors must make these mandatory withdrawals by Dec. 31 each year. First-time takers have until the following April 1 of the year in which they turn 72 to take their first RMD, but if they do that may have two distributions to take that year – their first RMD as well as the one required each year by end of year.The penalty for not taking an RMD is 50% of the amount of money that was required to be taken.
There are a few exceptions, however. For starters, Roth IRAs don’t have an RMD rule plans do). Also, beneficiaries of inherited accounts have their own rules to follow depending on if the original accountholder began taking distributions from those plans before death.
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