What happens if I fail to take my RMD?

If you fail to take your required minimum distribution (RMD), or take less than the required amount, you may be subject to an excise tax of 25% of the amount not distributed.

For example, if your RMD is $3,000 and you only withdraw $1,500, the remaining $1,500 shortfall may be subject to a $375 excise tax (25%).

If the error is corrected in a timely manner, the penalty may be reduced to 10%, and in some cases, the IRS may waive the penalty entirely if reasonable cause is demonstrated.

As a directed custodian, STRATA Trust Company does not provide tax, legal, or investment advice. STRATA recommends that you contact your tax professional immediately to determine the best course of action and ensure proper correction and reporting when filing your tax return. Visit the IRS.gov for more information on RMDs.