If you are the beneficiary of an IRA or other retirement account, you must take required minimum distributions (RMDs) each year. The same is true for most account owners age 70 1/2 or older. If you don-t withdraw the required amount, you-ll owe a 50 percent penalty on the shortfall.
RMDs were suspended in 2009. However, the requirement is effective again in 2010.
Many people arrange for the financial firm holding the IRA to pay out at least the RMD in monthly installments, thus avoiding the 50 percent penalty. Those arrangements may have been suspended in 2009, when no RMDs were due. If you are in that situation, you might want to contact the firm holding the IRA to request a resumption of RMD payouts this year.