As we are quickly approaching the end of the year, it is important to determine if you have taken your required minimum distribution from retirement-type assets. For a financial institution to do the calculation, process the request for the distribution and send out the distribution, bear in mind that you are not the only person for whom they are processing a distribution. So, please do yourself (and the financial institution) a favor and DON’T wait until December to initiate the distribution.
If an RMD (required minimum distribution) is not made by the end of the year, you can be surcharged for the failure to take the RMD.
For example – let’s say that your RMD for the year is $10,000. Not only do you have to pay applicable income taxes on the distribution; the surcharge calculation would be $5,000 or 50 percent. That’s a BIG chunk of your hard-earned money.
While many people think it best to wait until the end of the year, I always recommend that people think of taking their RMD during tax season. That way, it is done and doesn’t have to be thought about. Also, there is much less chance of missing the distribution that you have to take in any event and it will eliminate the possibility of a surcharge.
DON’T DELAY. Contact your financial institution to initiate your RMD for 2022 NOW if you aren’t already one step ahead of the game.