Not withdrawing the full amount will result in a steep penalty. Photo by Poon Watchara-Amphaiwan By Sandra Block, Senior Editor From Kiplinger's Personal Finance, December 2013 Ronald Fatoullah (pictured at left) is an elder-law lawyer and coauthor of The CPA's Guide to Long-Term Care Planning. Here are excerpts from Kiplinger's recent interview with Fatoullah:A report by the Treasury’s Inspector General estimated that more than 250,000 individuals failed to take required minimum distributions valued at $348 million in 2006 and 2007. Why do so many people fail to comply with the rule? In every instance that I’ve been involved with, seniors’ failure to take their RMDs was unintentional. They may have several IRAs in several different places. The law says that they are supposed to calculate each RMD, but they can take the RMD from any one of their IRAs. That's confusing. Sponsored Content SEE ALSO: When Do I Have to Take My First RMD? What's the deadline? Advertisement If you turned 70½ this year, you have until April 1, 2014, to take your first RMD; older IRA owners must take a distribution by December 31. What's the penalty for failing to take a required distribution? It's a whopping 50% of what you should have taken out. Let's say someone has $1 million in an IRA. At age 70½, that individual must take out $36,496. If he doesn't, the penalty is more than $18,000. That is huge. And he still has to pay income tax on the full amount. There's no statute of limitations on this. How likely is it that you'll get caught? Advertisement The custodians that administer your account have to report what your RMDs are. They send that report to you and to the IRS. The IRS knows what you should have taken, and it also knows what you did take out. They're going to catch you. What's your advice for seniors who are required to take RMDs before year-end? Be very careful. If you have multiple IRAs, coordinate your distributions so that you meet IRS rules. What about seniors who failed to take an RMD in the past? Advertisement If you didn't take an RMD or didn't take the entire amount required, I'd advise you to take the RMD immediately. Don't wait and combine missed distributions that were due in previous years with the RMD you will take later on for the current year. The IRS can waive part or all of the 50% penalty if you can show that any shortfall in distributions was due to reasonable error and that you're taking steps to remedy the situation. File IRS Form 5329, "Additional Taxes on Qualified Plans," and attach a statement of explanation. When requesting a waiver, don't pay the 50% penalty upfront. Waivers are typically granted when people neglected to take distributions because of physical illness or dementia. We have had great success in getting waivers in the past. But with the IRS cracking down on IRA mistakes, the future is uncertain.