James Suazo is quoted on this topic in an article in NJMoneyHelp.com by Karin Price Mueller, originally published on Sept. 13, 2019.
A 30-second read by James Suazo: The penalty for not taking one’s Required Minimum Distribution (RMD) from an IRA, according to the IRS, can be 50% of the amount that was not distributed. For example, if one is required to take $1,000 of RMD this year, failing to do so may cause a $500 tax bill.
Some items to consider:
- If one has multiple IRAs, the RMD can be taken from any account.
- If the money is not needed, the RMD can be placed in a taxable account to be invested.
- There are instances where the IRS can waive this penalty - for example, if you are in the process of correcting the missed RMD. A form must be filed with the IRS, which we recommend an accountant review before filing.
Ultimately, we recommend always taking your RMD, as the IRS also requires your custodian to report your accounts that are subject to RMDs.
For any questions, please contact your Baron Team.