10 RMD Mistakes to Avoid

After saving for years in an IRA, 401(k) or other tax-deferred retirement plan, you eventually have to take the money out and pay taxes on it.

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After saving for years in an IRA, 401(k) or other tax-deferred retirement plan, you eventually have to take the money out and pay taxes on it. Most people need to start taking these required minimum distributions after they turn age 70½—and the stakes are high. If you don’t take out the required amount by the deadline, you could get hit with a penalty worth up to 50% of the amount you should have withdrawn. It’s easy to make mistakes when figuring out the timing of RMDs, how much to withdraw and which accounts to tap. Here are 10 common RMD mistakes—and how to avoid them.

Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

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.