How to avoid a big tax penalty on your retirement savings
Figuring out how much you owe can be complicated. You divide your account balance at the end of the last year by a distribution period based on your age, O'Shea said.
For example, if you're single and will be 70½ on Dec. 31 of this year, and you had an account balance of $100,000 at the end of last year, your required minimum distribution for the year is $3,650.RMD amounts by increasing life expectancy figures. If the plan goes into effect, retirees could leave their money in their accounts for longer.to help you figure out your RMD. Your financial advisor also can do so.
Another option: Your IRA administrator can typically calculate your RMDs and set up a distribution schedule, O'Shea said. "Take advantage of that," she said. "It's much easier to factor these RMDs into your income that way, and you're not scrambling to meet the deadline — or risking forgetting." If you have multiple IRAs, you need to add them all up to determine your RMD, but you can usually take the required withdrawal from one account. However, if you have multiple 401 accounts, you typically have to make a withdrawal from each one, O'Shea said. And distributions from a 401 won't satisfy your IRA distributions, Slott said.
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