Archive · 20 Nov 2025
Avoiding Common Mistakes in Required Minimum Distributions
When you reach a certain age, you must start withdrawing money from your retirement accounts, known as Required Minimum Distributions (RMDs).
Here are three common mistakes to avoid: missing the deadline, miscalculating the amount, and getting confused about rules for different account types.
Missing the RMD deadline can result in a 25% penalty
Miscalculating RMD amounts can lead to additional penalties
Understanding rules for different account types is crucial
- Who
- Retirees with tax-advantaged retirement accounts like 401(k)s or IRAs
- What
- Avoiding common mistakes in Required Minimum Distributions (RMDs)
- When
- When retirees reach the age to start taking RMDs
- Where
- In retirement accounts like 401(k)s or IRAs
- Why
- To ensure retirees pay taxes on their retirement savings
Proactive Account Management
DIY RMD Calculation
Using Account Providers
Proactive Account Management
Account providers can calculate RMDs accurately.
DIY RMD Calculation
But relying on providers may lead to errors if not all information is provided.
- RMD Deadline
- End of the year, or April 1 of the following year for the first RMD
- Penalty for Missed Deadline
- 25% of the amount not withdrawn
- Penalty for Incorrect Calculation
- 25% of the amount not withdrawn