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Don't Wait to Take Your RMD

October 31, 2017


If you have a traditional Individual Retirement Account, you'll want to become familiar with the term "required minimum distribution," or RMD. In a nutshell, you're required to withdraw a certain amount from these accounts annually, beginning the year you turn 70½.

It’s important to stay on top of these withdrawals: If you miss a deadline or take out less than you should, you could face a penalty of 50% of what you should have taken out. So you can see that it pays to be on time and on top of things when it comes to RMDs. Consider these tips:

  • Plan ahead for the year-end deadline. You have until April 1 after the year in which you turn 70½ to take your first RMD, but any subsequent annual withdrawals must be completed by Dec. 31. If you’re required to take a withdrawal this year, now would be a good time to start the process.
  • Be sure to withdraw enough to meet the minimum. You can take out more than what is required, of course — but taking out less will trigger a penalty. Your RMD is calculated based on your age and prior year-end account balance.
  • Consider all your withdrawal options. You must calculate an RMD separately for each retirement account. However, you may be able to combine the totals and withdraw that amount from one or more accounts.

The rules can be complex, so be sure to discuss your withdrawal options with your financial advisor. He or she will partner with you to help determine the best way to take your RMDs and stay on track toward your goals.

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