1 Tax Deadline You're Forgetting

Neglecting this tax deadline will cost you big time.

Mar 16, 2014 at 1:00PM

April 15 takes center stage come tax time. But there's another tax deadline equally deserving of your attention -- and neglecting it could cost you big time. Here's what it is and how to deal with it.

The tax deadline you've never heard of
If you turned 70-1/2 years old in 2013, you have a critical tax deadline coming up. April 1 is the deadline for people who turned 70-1/2 to take their first annual required minimum distribution from their Traditional IRAs and 401(k)s. Typically you're supposed to take it by Dec. 31 of the year you turn 70-1/2, but the deadline is extended to April 1 for the first year. For every year following, you have to take the distribution by the end of the year. Unlike Traditional IRAs and 401(k)s, Roth IRAs have no RMDs.

Postponing your RMD will cost you
Forgetring to take your RMD will hurt you significantly. Neglecting to withdraw the RMD will result in a 50% tax on the amount not withdrawn! It's up to the account holder, not the financial institution holding the retirement account, to make sure he or she withdraws the correct amount. You can withdraw more than the minimum, but any extra won't count toward satisfying next year's RMD.

Your RMD will be different from your next-door neighbor's. It's calculated by dividing the prior year-end balance of that IRA or retirement plan account by a life expectancy factor that the IRS publishes. If you have multiple retirement accounts, you'll need to calculate your RMD and make a withdrawal from each one. Or you can calculate your total RMD based on the aggregate prior year-end balances and take the total RMD amount from any single account. This strategy works well when taking the entire withdrawal from an IRA that houses lower-returning investments.

Take action today
Given the expensive penalty for failing to make a withdrawal, don't let the April 1 tax deadline slip past you. Take care of your RMD today. Reach out to all of the brokerage firms and institutions that manage your retirement accounts for guidance on RMDs. Also, be sure to check out the IRS' information on this topic. Your wallet will thank you.

Is Uncle Sam about to claim 40% of your hard-earned assets? 
Thanks to a 2013 law called the American Taxpayer Relief Act, he can -- and will -- if you aren't properly prepared.

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Follow Nicole Seghetti on Twitter @NicoleSeghetti. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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