There is an important rule that many in the retiree cohort should keep in mind in the coming tax season. If one does not withdraw funds from their IRA that meets the RMD or required minimum distribution there is fifty percent penalty of the RMD amount. This can be particularly painful for those on fixed or limited incomes and resources. This is part of a greater question of using retirement funds that receives little attention as most financial planners are focused on getting someone to retirement rather than using the funds.
- You need to know and then abide by your RMD date of you wish to avoid a stiff penalty.
- Your RMD is your minimum distribution rate for your IRA. You do not want to let the date pass without withdrawing a minimum of 4000.
- Should you neglect this, you will owe the government a hefty check of 2000.
“Like many investors, you’re likely aiming to build a comfortable nest egg to ensure a comfortable retirement.”