Required Minimum Distribution
Learn about required minimum distributions from retirement accounts. Understand RMD rules, timing, and how they affect your estate planning strategy.
What happens if I don't take my required minimum distribution on time?
The IRS imposes a steep penalty if you miss your required minimum distribution deadline. You'll face a 25% excise tax on the amount you should have withdrawn but didn't. This penalty can be reduced to 10% if you correct the mistake promptly and file the appropriate forms. The penalty applies to the shortfall amount, so if you were supposed to withdraw $10,000 but only took $6,000, you'd pay the penalty on the $4,000 difference. Missing RMDs can also complicate your estate planning since these distributions are mandatory and affect your account balances.
