• With final holiday preparations looming, the last thing anyone wants to think about is next April's tax bill. But if you're over 70 ½ and have any tax-deferred retirement accounts (like an IRA), put down the wrapping paper and listen up: IRS rules say that, with few exceptions, you must take required minimum distributions (RMDs) from your accounts by December 31 of each year - and pay taxes on them - or face severe financial penalties.
• Here's what you need to know about RMDs:
• Congress devised IRAs, 401(k) plans and other tax-deferred retirement accounts to encourage people to save for their own retirement. Aside from Roth plans, people generally contribute "pretax" dollars to these accounts, which means the contributions and their investment earnings aren't taxed until withdrawn after retirement.
• In exchange for allowing your account to grow tax-free for decades, Congress also decreed that minimum amounts must be withdrawn - and taxed - each year after you reach 70 ½. To ensure these rules are followed, unless you meet certain narrowly defined conditions, you'll have to pay an excess accumulation tax equal to 50 percent of the RMD you should have taken; plus you'll still have to take the distribution and pay regular income tax on it.
• You can delay or avoid paying an RMD in certain cases, including:
• If you're still employed at 70 ½, you may delay starting RMDs from your work-based accounts until you actually retire, without penalty; however, regular IRAs are subject to the rule, regardless of work status.
• Roth IRAs are exempt from the RMD rule; however, Roth 401(k) plans are not.
• You can also transfer up to $100,000 directly from your IRA to an IRS-approved charity. Although the RMD itself isn't tax-deductible, it won't be included in your taxable income and lowers your overall IRA balance, thus reducing the size of future

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