7 IRA mistakes to avoid
Failing to take minimum distributions
This may seem like an unlikely problem: Who’s really going to forget to tap their IRA when they retire? Yet many of us end up working longer than we expected, and some retirees are lucky enough to find they don’t need all the money they thought they would once they stop working.
But as far as the government is concerned, there’s a time when you have to start taking withdrawals from a traditional IRA. Generally, it’s age 70 ½, although Roth IRAs don’t require withdrawals until after the death of the owner.
Your minimum distribution depends on how much you have in the account. The IRS has a worksheet to figure the amount.
Certified Financial Planner Diane Pearson notes there can be a 50% penalty on the amount not distributed. "Generally, the IRS has been lenient if you make a one-time goof," she says. But it’s best to avoid the mistake altogether.