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The Internal Revenue Service reminded those aged 73 and older of the deadline to take required minimum distributions (RMDs) from individual retirement arrangements (IRAs) and 401(k) before the Dec. 31 deadline – or face hefty penalties, the agency said in a Dec. 10 notice.
RMDs must be taken annually from IRAs, 401(k)s, 403(b)s and other retirement plans. These withdrawals are considered taxable income and may incur penalties if not taken on time. Failure to do so subjects the retiree to a 25% (down from 50%) excise tax on the amount not withdrawn, though the penalty drops to 10% if the shortfall is corrected within two years.
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