Every climb has a fixed checkpoint. For retirement account owners age 73 and older, December 31 is one of them. Required minimum distributions (RMDs) aren’t optional, and missing one is costly enough that it deserves your attention now, not in the final week of the year.
Who Needs to Take an RMD
RMDs generally begin the year you turn 73. Your first RMD can be delayed until April 1 of the following year, but every RMD after that is due by December 31. Delaying the first one also means taking two distributions in the same year, which can push more income onto a single return.
Where RMDs Commonly Go Wrong
- Multiple accounts. RMDs from traditional IRAs can be combined and taken from one account. A 401(k) or other employer plan generally has to satisfy its own RMD.
- Inherited accounts. Many beneficiaries who inherited an IRA from someone already taking RMDs must now take annual distributions during the 10-year payout period, and the IRS is now enforcing that rule.
- The still-working exception. If you’re still employed, aren’t a 5% owner, and your plan allows it, you may be able to delay RMDs from your current employer’s plan until you retire. This exception doesn’t apply to IRAs.
- RMDs are taxable income. Without enough withholding or estimated payments, a distribution can leave you with an underpayment surprise at filing time.
The Cost of Missing the Deadline
A missed RMD triggers a 25% excise tax on the amount you should have withdrawn. The penalty can drop to 10% if the shortfall is corrected promptly, but avoiding the problem is far easier than repairing it.
Why November Matters
Year-end requests can pile up at financial institutions in December, and processing may take longer as the deadline approaches. Reviewing your RMDs now leaves time to confirm the numbers, coordinate withholding, and decide whether a Qualified Charitable Distribution fits your giving plans.
Your Next Step
If you’re unsure whether your RMDs are on track, or how this year’s distributions affect your overall tax picture, we’re here to help you check the map before the deadline arrives.
Let us lighten your load.
