{"id":39007,"date":"2025-12-09T16:20:08","date_gmt":"2025-12-09T16:20:08","guid":{"rendered":"https:\/\/financialrush.com\/?p=39007"},"modified":"2025-12-09T16:20:08","modified_gmt":"2025-12-09T16:20:08","slug":"the-required-minimum-distribution-deadline-is-coming-what-to-know","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=39007","title":{"rendered":"The required minimum distribution deadline is coming. What to know"},"content":{"rendered":"

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As year-end approaches, many investors still need to take required withdrawals<\/a> from retirement accounts<\/a> \u2014 or face an IRS penalty of up to 25%. This includes retirees and certain heirs with an inherited individual retirement account<\/a>.<\/p>\n

At age 73, most retirees must start required minimum distributions<\/a>, or RMDs, from pretax accounts. Your first RMD is due by April 1 of the year after turning 73, and the deadline for future withdrawals is Dec. 31. For heirs facing RMDs, the annual deadline is also Dec. 31.<\/p>\n

With the annual deadline nearing, many investors haven\u2019t yet made their required withdrawal, according to data from Fidelity.\u00a0<\/p>\n

As of Nov. 30, 53% of Fidelity investors who needed a 2025 RMD hadn\u2019t taken one \u2014 and 29% of those outstanding RMDs were from inherited IRAs, Fidelity reported.\u00a0The data does not consider possible RMDs taken from accounts with other firms.<\/p>\n<\/div>\n

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More from Financial Advisor Playbook:<\/h2>\n
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Here\u2019s a look at other stories affecting the financial advisor business.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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At this point, if you\u2019re subject to the Dec. 31 deadline, you should \u201ctake it as soon as you can,\u201d Sham Ganglani, retirement distributions leader at Fidelity, told CNBC.\u00a0<\/p>\n

Otherwise, you could have less flexibility with the withdrawal. For example, some investors have to sell assets to make cash available for the RMD, he said. <\/p>\n

Every year, millions of investors must follow complex RMD rules or face an IRS penalty<\/a>. Those rules have changed in recent years amid new legislation<\/a> and agency guidance.\u00a0<\/p>\n<\/div>\n

What to know about the missed RMD penalty<\/h2>\n
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If you don\u2019t take your full RMD by the due date, the penalty is 25% of the amount you should have withdrawn. That could be reduced to 10% if the RMD is \u201ctimely corrected\u201d within two years, and you file Form 5329<\/a>, according to the IRS.<\/p>\n

In some cases, the IRS could waive the penalty entirely if the shortfall happened due to \u201creasonable error\u201d and you\u2019ve taken \u201creasonable steps\u201d to fix the mistake, according to the agency.\u00a0<\/p>\n

If you miss the Dec. 31 RMD deadline, take the funds \u201cas fast as you possibly can,\u201d to demonstrate a \u201ctimely\u201d withdrawal, said Ganglani. \u201c[The IRS] seems to be willing to work with you when you are doing the right thing.\u201d\u00a0 \u00a0 <\/p>\n<\/div>\n

Inherited IRA rules are \u2018the biggest landmine\u2019<\/h2>\n
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The complicated rules for inherited IRAs could also lead to IRS penalties, experts say.\u00a0\u00a0<\/p>\n

\u201cThis is the biggest landmine in 2025,\u201d said certified financial planner Scott Van Den Berg, president of advisory firm Century Management in Austin.<\/p>\n

Since 2020, certain inherited accounts are subject to the \u201c10-year rule<\/a>,\u201d which means heirs must deplete the balance by the 10th year after the original account owner\u2019s death.\u00a0 \u00a0\u00a0\u00a0\u00a0<\/p>\n

Plus, some non-spouse beneficiaries, such as adult children, must start taking RMDs in 2025 over the 10-year period.<\/p>\n

If the original account owner already started RMDs before death, non-spouse heirs must continue RMDs yearly. Previously, the IRS waived penalties for missed RMDs, but that no longer applies for 2025.<\/p>\n

\u201cMany beneficiaries have no idea the rule changed,\u201d Van Den Berg said.<\/p>\n<\/div>\n<\/div>\n\n
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