IRA Required Minimum Distributions

I turned 70½ in 2012, but I didn’t take the required minimum distribution from my IRA at the end of the year. Will I be assessed a penalty?

Tax-Free Transfers From IRAs to Charity Still Allowed

No. There’s a special rule for the year you turn age 70½: You have until April 1 of the following year to make the first required withdrawal from your traditional IRAs, 401(k)s, 403(b)s and other retirement plans (you may not need to take RMDs from an employer plan if you’re still working in that job, and Roth IRAs have no RMDs). After that, you generally have until December 31 of each year to take your required minimum distributions.

Many people take advantage of this first-year extension. As of December 31, 2012, 42% of Fidelity’s IRA customers who turned 70½ in 2012 had not yet taken their full RMD. But if you forget to take the required withdrawal by April 1, you could owe a penalty: up to 50% of the amount you should have taken but didn’t.

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To calculate your 2012 RMD, take your account balance as of December 31, 2011, and divide it by your life expectancy number in the appendix to IRS Publication 590 (most people should use Table III, the Uniform Lifetime table, unless your sole beneficiary is your spouse and he or she is more than ten years younger than you). Or you can use our RMD calculator. Your IRA plan administrator will usually help you with the calculations. Fidelity, for example, has a special RMD resource page.

You’ll have to do the whole thing again by December 31, 2013, for your age 71 RMD, then take your RMD by December 31 of every year after that.

For more information about taking your RMD, see Answers to Questions About Required IRA Distributions and Easy Ways to Calculate Required Minimum Distributions.

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.