3 required minimum distribution tax mistakes to avoid

If you are of a certain age and have saved money in a tax-advantaged retirement account like a 401(k) or IRA, the year will inevitably come when you have to start withdrawing those funds. These withdrawals, known as required minimum distributions (RMDs), are mandated by the IRS to ensure that at some point, you pay taxes on the balance you have amassed.

While it may sound straightforward enough to simply remove the money from your account, RMDs introduce a minefield of rules and particulars. You will want to make sure you are aware of these, especially since certain missteps can lead to a sizable tax penalty.

1. Missing the deadline

As the end of the year approaches, so, too, does the deadline for taking your RMD. If you miss this deadline, the IRS “imposes a 25% penalty on the amount n