A Birthday “Present” You Don’t Want
By Steve Sheppherd
The IRS has a birthday present for you; if you forget your age……A 50% penalty for not taking a Required Minimum Distribution once you reach age 72.
That’s right, 50% penalty for NOT taking money from your retirement plan.
Most of us recognize birthdays as milestone but this killer penalty sneaks in 6 months after your birthday cake is long gone. That makes it a deadline that’s easy to miss. Oh sure, you have a custodian, but it’s your responsibility to start taking the Required Minimum Distributions, or RMD for short. Trust me, if you miss this important deadline and get hit with the penalty they’re not going to help you pay it.
This stiff penalty consists of 50% tax on the amount you should have withdrawn.
For example, if your RMD was $5,000 you will now be pulling out $7,500 and sending $2,500 of that to your “favorite uncle” Sam.
Perhaps not a wise use of your hard earned retirement dollars.
Many people have had the date slip by them. 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.
If you have a Check Book IRA below is an article showing the steps to taking a distribution of any kind from the IRA owned LLC.
Here’s the link to the Blog post written by IRA expert and CEO of Check Book IRA, Jordan Sheppherd.
So remember to mark your calendars and be diligent for the RMD 50% penalty is one birthday present you may want to pass up.