Financial Focus - Client Question: I don’t need my required minimum distribution (RMD). What happens if I don’t cash the check?

Unfortunately, a required minimum distribution must be withdrawn by the required deadline, typically December 31st of the calendar year. A Form 1099-R will be prepared, and whether you cash the check or not, the funds will be included in your gross income for the year in which the distribution occurs. If an account owner fails to withdraw a RMD, fails to withdraw the full amount of the RMD, or fails to withdraw the RMD by the applicable deadline, the amount not withdrawn incurs a 50% penalty. In other words, take the distribution and cash the check to avoid negative consequences.

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To view other articles in the November 2019 Financial Planning Focus newsletter, click here.
 

Important Disclosures

West Financial Services, Inc. is an SEC registered investment adviser. Registration with the SEC does not imply a certain level of skill or training.

Information contained herein was derived from third party sources including, but not limited to, Bloomberg, Standard & Poor’s, Dow Jones & Company, the Federal Reserve Bank of New York, and Morningstar, Inc. While the information presented herein is believed to be reliable, no representation or warranty is made concerning the accuracy of any information presented. We have not and will not independently verify this information. Please contact us if you would like to obtain a copy of the third party sources.