Each Wednesday 401kBasics posts a new article in a weekly series called “Keep the Course”. This series is designed to give the average consumer information on how to keep their 401k plan on track! Your feedback or suggestions on future articles is welcome.
If you turned 70.5 years old by the end of 2010, you may have been required to take a distribution from your 401k plan, known as a Required Minimum Distribution (RMD). Failure to take an RMD by the end of the year will subject you to an excise tax that is equal to 50% of the amount you failed to withdraw. If you failed to take your RMD and are subject to this tax, contact your tax prepare for assistance.
A few details to keep in mind with the RMDs are as follows:
- If you were actively employed, and not an owner of the company, you probably didn’t have to take the RMD and should consult your employer or 401k service provider for further guidance.
- When it comes to 401k plans, you cannot take an RMD from another retirement account to satisfy this requirement
- Any withdrawal taken during the year that was not rolled over will count towards satisfying this requirement.
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