Susan Brandeis, CFP® explains the repercussions of not taking the required minimum distribution (RMD) from your individual retirement account.
Hi, I’m Susan Brandeis, CERTIFIED FINANCIAL PLANNER™ and Director of the Financial Planning Department here at Pure Financial, and this your Question of the Week.
This week’s question is: is there a penalty for not taking a required minimum distribution from your IRA? The answer is yes. Everyone is required to take a distribution from their IRA once they’ve reached the age of 70 1/2.
However, if you don’t take your RMD, the IRS will penalize you 50%.
So what that means is if your required minimum distribution is 20,000, and you don’t take it, your tax penalty alone is $10,000. It’s one of the most egregious tax penalties in the IRS code, so make sure to take your distribution on time, and as always, consult a tax professional if you have further questions.
I’m Susan Brandeis, and that was your Question of the Week.