Have You Taken Your RMD For 2018?

For those of you that are 70-1/2 years of age and are fortunate to have a retirement type account, such as a traditional IRA, have you taken your RMD (required minimum distribution) for 2018?  If not, it is not too early to be thinking of doing so.

Often times the distributions are put off until December, and even the end of December.  Thinking that you must delay the distribution until the end of the year is not necessarily the best thinking.  Distributions can be taken at any time during the calendar year and needn’t be in a lump sum and are able to be spread out over the course of the year in periodic payments.  Why wait until the end of the year for the distribution when you could be making life easier with periodic payments.

Perhaps you look at the RMD as a way to fund a vacation or a large purchase or a home remodeling event and would rather receive a lump sum.  BUT, what happens if the RMD is not made for the year?  You or your financial advisor have a personal matter – family crisis, job crisis, medical crisis – arise and the RMD is overlooked.  Or, the request for the distribution is not processed in time because the financial institution is scrambling to fulfill all of the last minute distributions.  Well, first of all, you can be surcharged by the IRS for not taking the distribution.  The distribution is most likely taxable income and reportable for income tax purposes, but why pay a surcharge of 50 percent of the amount which should have been withdrawn.  That’s a pretty hefty amount.

I have seen many situations where a beneficiary dies unexpectedly before taking the RMD for the year.  While sorting out the estate matters, the calendar changes.  There could be a surcharged assessed so why take that chance?

Don’t wait until the halls are decked with holly to think about your RMD. Be thankful in the month of November for accumulating this asset and the benefits you are able to enjoy from it.

Tags: RMD