Missed RMD Deadline? Here's the Massive Penalty You Could Face

Failing to take your required minimum distribution (RMD) could cost you more than expected. There's a 25% penalty assessed for missed RMDs.

• Failing to take your required minimum distribution (RMD) could cost you more than expected.
• The IRS imposes a 25% penalty on the amount not withdrawn on time.
• RMDs are mandatory for traditional retirement accounts and must be taken annually by December 31.
• The first RMD can be deferred until April 1 of the following year, but this may result in two RMDs due in the subsequent year.
• A $40,000 RMD not taken could incur a $10,000 penalty.
• Setting up automatic withdrawals can help avoid penalties, and correcting a missed RMD within two years can reduce the penalty to 10%.