RMD To-Do List

December is right around the corner, meaning that you must be on top of the year-end deadline dates for contributions to and distributions from your various retirement accounts.  Below are some the common mistakes that retirement account owners make at year-end, and what you can do to avoid them.

• Take your required minimum distribution (RMD) before year-end. Forgetting to take, or taking less than the RMD from your retirement accounts is a common mistake.  Understand that you must take your first RMD from your IRA for the year in which you turn 70 ½. However, you can delay the first payment until April 1 of the following year.
• Understand rules for inherited IRAs. If an IRA owner died this year and did not take the RMD, it must be taken before the end of the year and is payable to the beneficiary, not the estate.  Beneficiaries must take RMDs before December 31.  If you are the owner of an inherited IRA from a non-spouse do not forget to take your RMD as there is a 50 percent penalty on amounts that should have come out. 
• Take your RMD from your 401(k). Take RMDs from your 401(k) by what’s called you’re your required begin date.  According to the IRS, the required beginning date is April 1 of the first year after the later of the following: (1) Calendar year in which the participant reaches age 70 ½; (2) Calendar year in which the participant retires. 
• Aggregate your RMDs. You are likely to make RMD mistakes if you own many different types of retirement accounts.  Thus, if you have more than one IRA and have reached your required beginning date you can aggregate your IRAs and take the RMD from any or all of them.  However, you cannot aggregate 401(k)s.

See Robert Powell, Year-End Retirement Plan To-Do List, USA Today, Nov. 15, 2014.