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If you are 70½ or older, or you have an inherited retirement account, you need to take a required minimum distribution for this year.
The official deadline to take that money out is Dec. 31. If you fail to meet that deadline, you face a 50 percent tax penalty on the amount of money you should have taken out.
But beware: You need to leave enough time for that RMD request to be processed by your financial institution or financial advisor, particularly if you need to sell investments in order to generate cash to take the distribution.
And because firms and financial advisors typically receive so many of these requests at this time of year, they may have set an earlier deadline for you to get your request in to make sure it is processed in time.
"There's always those who wait until the last minute, and then they find that certain financial institutions or their advisors have a cut-off date," said Ed Slott, founder of Ed Slott & Co. and an expert on IRAs.
"People think they have a week," he said. "They might only have two, three or four days."
At Fidelity, they recommended clients get their forms requesting RMDs in by Dec. 15 of this year.
Now that that date has passed, the message for all clients who still need to take those distributions is to act now, according to Joe Gaynor, director of retirement and income solutions at Fidelity, particularly if you need to sell securities.
"It could take a couple of days for trades to settle, and if they make a mistake, the penalty being 50 percent of the missed amount is so huge," Gaynor said. "Don't leave it to the last minute."
If you just turned 70½ this year, you actually have until April to take your first RMD.
That's good news — sort of.
If you wait until April, you're stuck taking two RMDs — your first and your second — in one tax year, Slott said.
"They might decide, at the last minute this year, 'Maybe I'll take my first or part of it, and spread the income out over two years,'" Slott said.
If you inherited retirement funds in an IRA, you also need to take RMDs on those funds. And if the person you inherited the funds from died in 2017, you need to take your first RMD by the end of this month.
The same goes for inherited Roth IRAs, provided you are not the spouse of the deceased person, who can do a rollover, Slott said. Children and grandchildren, for example, need to take RMDs on Roth IRA accounts.
"Roth IRAs are not subject to RMDs in your lifetime," Slott said. "But inherited Roths are."
It's important to take your RMDs the right way, according to Jeffrey Levine, CEO and director of financial planning at BluePrint Wealth Alliance.
That means taking the distribution from the right account. If you have an IRA and a 401(k), you can't the IRA RMD from the 401(k), Levine said. Likewise, you can't take the 401(k) RMD from the IRA. In that case, each RMD has to be taken from its own separate account.
If you have multiple IRAs, you can take your RMD from one of those accounts. But your distribution amount needs to consider your total balances.
Also be sure to take the correct amount. RMDs are typically determined by using your life expectancy factor and year-end balance from the previous calendar year, Levine said.
Also beware that RMDs for inherited accounts are calculated differently.
Most firms or financial advisors will provide you with a calculation for how much you need to take out.