Required minimum distributions for clients with IRAs and other retirement accounts are often taken near year-end. The required beginning date for RMDs is generally April 1, following the year the client turns age 70 ½, but after that RMDs are due by year end. For inherited IRAs, RMDs must generally begin during the year of death and be taken by the end of each future year.

There is a 50% penalty for any shortfall, but the IRS will generally waive the penalty for good cause, such as health issues or mistakes made by advisors or financial institutions. If an RMD is missed, it is essential that clients immediately make up the missed RMD and file Form 5329 with the taxes to report the missed distribution and request that the penalty be waived.

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