April 1 Deadline For First-time Retirement Plan Distributions

April 1 is a deadline for those who turned 70 ½ during 2017 and have an IRA or employer type retirement plan. They have to take their required minimum distribution (RMD). A 50% penalty usually applies to any required amount not received by the April 1 deadline; if your RMD is $1,000 the penalty for not taking it is $500.

If you turned 70 and ½ in 2017 your first RMD has to be taken no later than April 1 of 2018. You still have to take your regular 2018 RMD before December 31 of 2018. So if this is your first year, you have to take 2 RMD’s. The RMD rules apply to traditional IRA’s and IRA-based plans like SEP’s, SARSEP’s, and SIMPLE IRA’s but they do not apply to ROTH IRA’s.

If you turned 70 ½ last year and have not heard a peep out of your plan administrator, contact them for help. If you do not need your IRA money yet, you can ask your administrator about a Qualifying Longevity Annuity Contract (QLAC) which can extend the RMD beyond age 70 ½.

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