It’s not April showers or even pennies from heaven, but anyone who put money away into a retirement plan needs to watch the calendar, particularly if they turned 70½ in 2014.

The IRS is reminding these folks that they must take a required minimum distribution from traditional IRAs, 401(k)s, 403(b)s, 457s and most other workplace retirement plans by April 1.

If they don’t, the cost could be huge: 50 percent of the amount they don’t withdraw but were required to. Say a senior should have taken $5,000 from a 401(k) plan by April 1 and failed to do so, for whatever reason. Uncle Sam will collect a penalty of $2,500 for that failure.

Once that first RMD is over with, they’re not done. A second RMD must be taken by Dec. 31 — and in every year after that, the RMD must be taken by the last day of the year.

The sole exception is the Roth IRA, which has no withdrawal requirements. After all, you’ve already paid the taxes on the money in a Roth, so the IRS isn’t hot to see the funds disbursed, while in other retirement plans, it can’t collect taxes until the money is out of the account.

If you’re still actively working, of course, you generally don’t need to take money out of your employer’s 401(k). But other than that, get ready to reverse the direction of all that retirement saving.

So how do you know how much money you need to take out — particularly if it will cost you half of it for not doing so on time?

Well, there’s a table for that — two, actually. One is the standard, Table III (Uniform Lifetime), which helps you calculate how much the RMD has to be. The other, which is only for a taxpayer with a spouse more than 10 years younger who is the taxpayer’s only beneficiary, is Table II. There are also calculators online at a number of investment companies’ websites.

Once you have to take money out, remember that you don’t have to take it in a lump sum— at least if you’re not up against that deadline.

Instead, you might prefer to get it in installments throughout the year rather than all at once at the end. If so, you might want to consider setting up a series of automatic withdrawals.

So, what if you forgot about it? Or had an illness or other emergency that caused the date to pass unmarked? You can ask for a waiver of the penalty, via a submission of IRS Form 5329 and a letter that explains the reason for your omission. You should also let the IRS know what action you plan to take to make up for the failure.

Instant Insights /

No fooling, first IRA withdrawal deadline is April 1

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