Have you taken the required minimum distribution (RMD) from your individual retirement arrangement or workplace pension plan?
That’s an important question, because failure to take your RMD on time could result in a stiff penalty of 50% of the amount you should have withdrawn (plus the income tax on the distribution).
In general, those who are over age 70½ must take at least a minimum payment from their retirement account each year by December 31. (A bonus for first-timers: You have until April 1 of the year following the one in which you turn 70½ to take the RMD.)
One exception to the rule is if you have a Roth IRA, which is not subject to an RMD during the account owner’s lifetime. Each taxpayer’s RMD is based on the amount in their retirement accounts and their life expectancy. You can always take more than your RMD, but your withdrawals are included in your taxable income.
Whether you’re planning for retirement or already enjoying it, it is important to determine or update what your RMD will be, decide how much income you will need each year and plan ways to minimize your tax bite.