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It centers around your required minimum distributions (RMDs).
Per theIRS, RMDs are the minimum amounts you must take out of your retirement accounts each year.
For someone who doesnt take their RMDs, the penalties can be big.
At the same time, there are ways to perhaps soften the blow to finances.
Heres a look atsome things retirees should know about RMDsand penalties.
So, if you turned 73 in 2024, you must take the first RMD by Apr.
The second RMD must be taken by Dec. 31, 2025.
The Reason
Why are you required to make these withdrawals?
You may face a 25% penalty on the amount that should have been taken out.
As noted bySmartAsset, while this penalty is high, it used to be 50% in recent years.
The Options
If you miss an RMD, you still may have some options.
It may be helpful to contact a financial advisor for some advice.
If you correct the situation in a timely fashion, the penalty may be cut to 10%.
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