If you are a lot younger, skip to the last paragraph!
The custodian of your qualified accounts is required to notify you that an RMD is required on the balances you held with them on 12/31/2014. If an account was rolled over during the year, you need to find out if the distribution was taken and, if not, the amount that needs to be taken.
Failure to take the required distribution results in a 50% excise tax penalty. If you find yourself in this boat, you can get a waiver by first paying the penalty and then contacting the IRS and doing a triple somersault back flip through a hoop for them. Recommendation: take the distribution as required, on time.
If you have an IRA at Schwab, click "Balances":
Source: Charles Schwab |
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Near the top left, you'll see a dark blue box which contains your accounts. Make sure you select your IRA(s) and then scroll down. On the right hand side, you'll see this:
Source: Charles Schwab |
To take the distribution ($13,298.36 in this example), you need to have the required amount in cash in your IRA.
Where do you put the distribution?
This, of course, is up to you. You can have it sent to you, or you can put it in your taxable brokerage account.
But what if you had an IRA transferred to Schwab in March, say, of this year? Then, obviously, they won't know what your balance was at the end of 2014; and the previous custodian probably did not take the distribution. But this is not a problem. Schwab, as well as many others, provide easy-to-use calculators online to figure the distribution amount. Here is Schwab's: Schwab RMD Calculator.
IMPORTANT: ALL OF THIS MAY NOT APPLY TO YOU BUT TO SOMEONE YOU KNOW. You may want, for example, to casually mention to seniors (as a great conversation starter) that you just learned about the high fee the IRS charges if people miss their RMD.