Missed Your RMD in December? Here's What to Do.

The nice thing about saving for retirement in an IRA or 401(k) plan is getting a tax break on the money you contribute. But come retirement, traditional retirement plans have one big disadvantage over Roth accounts.

Traditional retirement accounts force savers to start taking required minimum distributions, or RMDs, once they turn 73 (though for younger savers, that requirement doesn't kick in until age 75). If you don't need the money, RMDs can be a real hassle, as they could subject you to taxes.

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RMDs are generally due by Dec. 31 each year. However, if it's your first RMD, you're allowed to defer it until April 1 of the year after you turn 73.

If your 2026 RMD wasn't your first one and you failed to take it, you may be looking at a pretty big penalty. So it's important to try to minimize the damage.

The sooner you act, the better

The penalty for not taking an RMD on time is 25% of the sum that didn't get removed from your retirement account but should have. So if you were supposed to take a $10,000 RMD this past December and didn't, it means you may be looking at losing $2,500. Ouch.

If you missed your last RMD, the best thing to do is act quickly. You can often get your penalty reduced if you remedy the situation within two years. In some cases, the IRS might even agree to waive your RMD penalty altogether if you can show that your failure to do so stemmed from a reasonable error you've since taken steps to dix.

To address your missed RMD, you'll want to file Form 5329, which allows you to report the missed distribution and request that the penalty be waived. You'll have an opportunity to explain to the IRS why your RMD didn't get taken on time and how you've addressed the issue so it won't happen again.

Don't risk a repeat RMD mistake

Missing an RMD as a one-off thing is something that happens. But it's important to avoid having it happen again.

Many retirement plans let you set up automatic withdrawals in line with RMD requirements. That may be worth doing so you don't have to stress about facing a giant penalty in a future tax year.

Plus, sometimes, life gets busy. And you never know when an illness or injury might sideline you. Putting those RMDs on autopilot could help you avoid a penalty due to forgetfulness or human error.

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