Required Minimum Distributions from Retirement Accounts

Based upon your age, you may be required to take minimum distributions from your retirement assets.  If you don’t, then unlike in 2020 when the requirement was waived, failure to take your RMD may cause you to be surcharged.  And, the surcharge could be 50 percent of the amount you should have taken. 

With less than three months to go in the year, NOW is the time to be thinking about your RMD and to consult your financial advisor.  It is never a good idea to wait until December because the financial institutions are frantically trying to get all of the paperwork in order to meet the RMD deadline of December 31.  And, I have seen things fall through the cracks and the distributions don’t get processed in time.  This then creates more work for everyone and possibly a surcharge for the retiree. 

I suggest that RMDs be taken in the first quarter of the year.  That way, if something unforeseen should occur, your estate is not faced with having to worry about whether the RMD was taken for the year.  Processing paperwork for estates requesting the RMD is more cumbersome than for a living individual. 

Make it easier on yourself and don’t wait until December.  Start the process for 2021 if you haven’t already and speak with your financial advisor about receiving the RMD earlier in the year to avoid possible complexities later in the year. 

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About the Author

Kay Sowa is a paralegal in the Trusts and Estates Group at Capehart & Scatchard, P.A. She is an IRS Enrolled Agent, an Accredited Estate Planner®, and a Certified Trust and Fiduciary Advisor. She oversees the trust and estate administration practice for the firm. She is an accomplished author and lecturer who has frequently spoken on behalf of a number of organizations including the National Business Institute and the Institute of Paralegal Education.

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