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Don't Start 2015 with a Penalty: BWC's IRA Distribution Advice Thumbnail

Don't Start 2015 with a Penalty: BWC's IRA Distribution Advice

The holiday season can be a hectic time, a time when details easily fall through the cracks. But when one of these details isforgetting to take your required IRA distribution, the associated penalty is one you are sure to remember.

 What is your "Required Minimum Distribution" or "RMD"? You are required to take a minimum distribution out of your IRA annually, beginning in the year you turn 70 ½ years old or, in most circumstances, when you have inherited an IRA or retirement plan.

Your Required Minimum Distribution (RMD) is based on a combination of your life expectancy and account value on December 31 of the prior year. You can calculate your RMD using an online tool or by discussing your situation with your financial advisor.

Why is it important to take your IRA RMD on time? If you do not take your IRA distribution in the year you become eligible and every year there after, you will have to pay a penalty of 50% of your distribution.

This means that if your RMD is $20,000, your penalty will be $10,000 -plus taxes on the original $20,000. So it's important that you work with your financial advisor to get your distribution in order prior to December 31.

What if you own multiple IRAs? You must take a distribution based on each IRA you own. However, there is an aggregation rule that allows you to combine your distributions and pull the total amount from one IRA - as long as the IRAs are the same type.

 What happens when you inherit an IRA? There are a variety of rules that apply to distribution when you inherit an IRA, so the best approach is to talk to your financial advisor.

In general, you will still have to satisfy distribution requirements and take a distribution from an inherited IRA every year. And you will still face a penalty if you do not make your distribution on time.

Can you automate your IRA RMD each year? While you will be responsible for your IRA RMD each year once you turn 70 ½, there are ways to automate your distribution so that you are not scrambling to take it during the holidays.

A full-service advisor can automate a periodic distribution so you never miss the deadline - and never face that hefty penalty. 

A variety of situations require more complex considerations.  A good reference source for RMD FAQs is

Need to coordinate your IRA RMD? Contact us if you would like to learn more about your distribution situation, and worry about one less detail this holiday season.  

About the Authors:

 Dana McLaughlin is a Senior Wealth Advisor at Beirne WealthConsulting, responsible for advising individual clients on financial organization, investments, retirement and education planning, trust asset management, and efficient wealth transfer.

 Lise Robinson is a Senior Wealth Advisor at Beirne Wealth Consulting, responsible for advising individual clients and institutions on asset management, financial planning and organization as well as overall assistance in addressing the various financial issues that arise over the course of one's life or business.  

About Beirne Wealth Consulting Services, LLC

Beirne Wealth Consulting Services, LLC (“BWC”) is a growing, privately owned, SEC Registered Investment Advisor with about $2 billion in assets under management and over 25 employees in Connecticut, Pennsylvania and Florida. BWC provides independent, fee-based investment management services and customized financial planning solutions. Our institutional business provides consulting expertise to defined benefit and defined contribution plans, endowments, foundations and non-profit organizations. Our private clients include high net-worth individuals and prominent families, many of whom bring complex wealth management challenges and multigenerational planning needs. For more information, please visit or give us a call today at 888-231-6372.