Missed Your RMD? Better Get out your checkbook.

Every so often bills don't get paid or paperwork is overlooked. Statements can get lost in the mail, you might be on an extended trip when the payment is due, or you may have forgotten to send in the forms.

Generally the company will just tack on a late fee or overlook the delay. However, the IRS is not so generous, especially when it comes to your required minimum distributions ("RMD").

IRA owners must start taking RMDs no later than April 1 of the year after they turn age 70½.  And by each December 31 thereafter, they must do the same. Failure to follow these rules can be very expensive.

IRA custodians are obliged to tell the treasury department if you are subject to RMD; they do not, however, have to report the amount.

If you miss taking a distribution or take one that is less than required, you must take the missed distribution and pay a 50% penalty on that amount. And since distributions do not get special consideration as dividends or capital gains, they are considered ordinary income. Therefore, they are assessed at your highest federal and state tax rate. This means that the penalty and income tax could possibly total more than 85% (assuming a combined federal and state tax of 35% plus the 50% penalty).

We can help you sort through the complex RMD regulations and calculate the amount that you must withdraw from your IRAs this year.

If you would like to meet either in person or by telephone, or simply would like to receive my free "IRA Guide", please use the CONTACT US link and let me know.

I look forward to meeting you!