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Ed Slott is one of the nation's top experts on IRAs. But a couple of years ago, someone near and dear to him neglected to take a required minimum distribution from one of her individual retirement accounts.

"It happened to my mother," Slott admitted with a laugh - an ironic story for someone who has written numerous books on retirement distribution planning, and who also hosts a popular financial advice series on public television and trains financial advisers on IRAs.

"Her adviser just forgot about one of her accounts," said Slott, who is based in Rockville Centre, New York. "That shows you how easy it can be for this to fall through the cracks."

Internal Revenue Service rules require retirement investors to begin withdrawing a certain amount annually from traditional IRAs (not Roths) and 401(k) accounts in the year that they reach age 70-1/2. The deadline for most required minimum distributions (RMDs) is Dec. 31, so this is a good time to double-check on your retirement accounts, or those of any family members you might be assisting with money management. Missing the RMD deadline leaves you on the hook for an onerous 50 percent tax penalty - plus interest - on the amounts you failed to draw on time.

The RMD rules exist to limit the tax benefits of these accounts to the years when you save for retirement; income taxes on withdrawn assets are due in the year of your drawdown.

But RMDs can be a real headache. They can trigger an increase in income taxes if they push you into a higher bracket - and they can trigger higher taxes on Social Security benefits and substantial high-income surcharges on Medicare premiums.

Tricky rules

All IRAs and 401(k) account owners who have reached the magic age are subject to the RMD rules. One exception: if you are still working for the company that sponsors your 401(k), the IRS rules do not require that you take a distribution.

There is also an exception to the Dec. 31 deadline. In the year that you turn 70-1/2, you have until April 1 to take your RMD. However, waiting until April means you will be taking two distributions in the following year.

If you inherit an IRA, distributions are required unless you received it from a spouse. The IRS rules on managing your inherited IRA can be found here.

RMDs must be calculated for each account you own by dividing the prior Dec. 31 balance with a life expectancy factor that you can find in IRS Publication 590. Often, your account provider will calculate RMDs for you - but the final responsibility is yours. The Financial Industry Regulatory Authority, the financial services self-regulatory agency, offers a calculator to help figure out RMDs.

Slott warns that the rules are especially tricky for people who have multiple accounts. "People often ask which of their RMDs can be combined and taken from one account - they often think it doesn't matter where the distribution comes from," he said. "But they're wrong."

The IRS rules require that RMDs must be calculated separately for all the accounts you own. In some cases, RMD amounts can be added together and the distribution taken as you like from one or more of the accounts. Any type of IRA accounts can be aggregated, which means you could total up your RMDs and take it all from one IRA - one that is a poor performer, perhaps, or one that will help you rebalance an account that might be overweight in equities in your allocation plan.

Multiple 403(b) accounts also can be aggregated, but you cannot satisfy an RMD from an IRA with funds from a 403(b), or vice versa. And 401(k) RMDs cannot be aggregated at all - if you have more than one 401(k) account from former or current employers, those RMDs cannot be aggregated - you must take the RMD from the accounts separately.

Keep it simple

Slott notes that simplicity is the retirement investor's friend when it comes to RMDs - consolidating IRAs reduces paperwork and complexity. Likewise, consolidating 401(k) accounts during your career makes it easier to track investments and RMDs - and even avoid them if you are still working at age 70-1/2.

The 50 percent penalty is a tough pill to swallow - but Slott says the IRS often will waive the penalty if you make a mistake but can offer a "reasonable cause" for the error. First, take corrective action immediately by taking the required distribution. Then, file IRS Form 5329, explaining in one written sentence how you screwed up. "You were confused by the rules, or you miscalculated, or your financial adviser made an error," he suggests.

"It's easy to get it waived," he added. "That's what happened in my mother's case."