Introduction: What Counts as an RMD Mistake and How to Fix It
What counts as an RMD mistake and how to fix it is something every retiree should understand. In 2025, more people are reaching the age when Required Minimum Distributions begin. Without proper planning, you may run into costly issues. Fortunately, if you know what to look for, you can avoid problems. This guide will show you what counts as an RMD mistake and how to fix it easily.
Page 1: Understanding RMDs and Why They Matter
RMD stands for Required Minimum Distribution. This is the smallest amount you must take out from certain retirement accounts each year. Starting in 2025, you must begin taking RMDs at age 73. However, that rule could change, so it’s important to stay informed.
RMDs apply to traditional IRAs, 401(k)s, 403(b)s, and other tax-deferred accounts. Roth IRAs don’t require RMDs during your lifetime. Because of that, planning your withdrawals carefully is key.
If you miss a withdrawal or take out too little, you make an RMD mistake. Therefore, understanding what counts as an RMD mistake and how to fix it is essential to avoid penalties.
Common Mistakes and Simple Fixes
- Missing the Deadline – RMDs must be taken by December 31. The first year allows a delay until April 1 of the next year. Missing the deadline is one of the most common mistakes.
- Taking Too Little – If you don’t withdraw the full required amount, that’s still a mistake. This can lead to extra taxes.
- Using the Wrong Account – You can combine RMDs from multiple IRAs, but not from different types like a 401(k). Taking from the wrong account leads to trouble.
Fix It: To fix it, file IRS Form 5329. Also, take the correct amount as soon as you notice the problem.
Page 2: How to Calculate RMDs and Spot Traps
To calculate your RMD, look at the account balance on December 31 of the previous year. Then, use the IRS life expectancy table. Most people use the Uniform Lifetime Table.
How to Calculate
For example:
- You’re 73 in 2025
- Your account balance on Dec 31, 2024: $100,000
- IRS table divisor: 26.5
- RMD: $100,000 ÷ 26.5 = $3,774
That’s how much you need to withdraw for the year.
What Counts as an RMD Mistake and How to Fix It
- Using the Wrong Numbers – If you use the wrong table or a wrong balance, your RMD will be incorrect.
- Overlooking Inherited IRAs – Inherited retirement accounts have separate rules. For example, many must be emptied within 10 years. If you forget this, it counts as a mistake.
Fix It: To fix it, make the correct withdrawal and submit Form 5329 with an explanation. Be sure to act quickly.
Page 3: Stay Ahead and Avoid Errors
While RMD rules can be tricky, planning ahead helps. By staying organized and informed, you reduce your chance of errors.
What Counts as an RMD Mistake and How to Fix It
- Forgetting a Retirement Account – Having multiple accounts can lead to confusion. It’s easy to skip one.
- Trusting But Not Verifying – Sometimes, financial firms give you RMD numbers. However, those numbers might be wrong. Double-check everything.
- Missing Rule Changes – Laws change. For instance, the RMD age was recently updated. If you don’t keep up, you might make a mistake.
Fix It: Review your accounts each year. Use online calculators or ask a financial advisor.
Final Thoughts
In 2025, it’s more important than ever to understand RMD rules. By knowing what counts as an RMD mistake and how to fix it, you can protect your money. Moreover, acting early prevents stress later. Plan ahead, take the right steps, and enjoy peace of mind in retirement.
