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:
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.