Failure to take required minimum distribution (RMD)

An RMD is a requirement that certain older individuals withdraw a calculated amount of money from their retirement accounts each year. It applies to most retirement accounts, including work plans like a 401(k) and traditional IRAs.

The amount you owe is calculated by dividing your account balance as of Dec. 31 last year by your life expectancy. The IRS has its own published life expectancy calculations.

The deadline for most people is Dec. 31. However, those who reached the age of 70 ½ during 2018 have until April 1 to withdraw their first RMD. But they would still have to meet the Dec. 31 deadline next year, which would require taking two RMDs within the year.

Failing to meet the deadline could result in the IRS penalizing retirees for as much as 50 percent of the amount they were supposed to withdraw.