When a person reaches age 72, which will occur this year for those born in 1950, they are required to begin taking distributions from their IRAs and 401K plans.
If they don't take the required distributions, they could lose half of that money to the IRS as a penalty, the agency warned taxpayers as the year comes to a close.
If taxpayers can't arrange a distribution by Dec. 31, that's okay: they can take the distribution any time before April 15 or their tax filing day for 2022 taxes.
If they have a Roth IRA, for which taxes on contributions have already been paid, they don't have to take minimum distributions.
There was a pandemic exception in 2020, and that year's contribution could be returned to the account without paying taxes.
If you did take a distribution in 2020, you can pay it back or spread the taxes on it over three years.