Over 70? You Have Until Dec. 31 to Avoid a 50% IRS Penalty
Tax season doesn't start until after the New Year, but that doesn't mean you can afford to wait that long to think about tax matters. The IRS doesn't hesitate to impose penalties when it can, and one of the most draconian provisions of tax law hits a population that can typically afford it the least: those who reached age 70 by June. Those who don't take required minimum distributions from tax-favored retirement accounts like traditional IRAs and 401(k)s by Dec. 31 could face a 50% penalty. Avoiding the penalty isn't hard, but it does require that you get your act together sooner rather than later.
Retirement savers get a huge benefit from IRAs and 401(k)s, but lawmakers wanted to put some limits on just how long people could keep money in their retirement accounts. The required minimum distributions (RMDs) rules do this by requiring you to tap your traditional IRAs and 401(k)s in measured chunks over time, regardless of whether you actually need the money for current living expenses.
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Source: Fool.com
