The year a person turns 70½ years of age, he or she must begin making an annual Required Minimum Distribution (RMD) from IRAs, 401(k)s and similar retirement plans. According to the IRS, retirement plan participants and IRA owners are responsible for taking the correct amount of RMDs on time every year. Those who fail to do so face stiff penalties — 50 percent of the amount not taken.

You may delay your first RMD until April 1 of the year after you turn 70½; however, you would still need to take your second RMD by December 31 of the same year. For example, if you turned 70 in November 2009. That means you turned 70½ in May 2010. You may take your 2010 RMD by December 31, 2010, or you may wait until April 1, 2011. If you defer, you must take a second distribution — for 2011 — by December 31, 2011.

The RMD rules apply to all qualified retirement plans, such as 401(k)s, 403(b)s and 457s. The rules also apply to IRAs, including contributory, SEPs, Simples and Rollovers. The total IRA RMD can be taken from one account, but it must take into consideration all IRA assets.

Distributions from qualified retirement plans should be taken separately from IRA accounts. If you have multiple qualified retirement accounts, greater complexity is involved and you should contact an advisor. Inherited IRAs are unique distributions, must be taken separately and have special rules.

If you have questions about the required minimum distribution process, don’t hesitate to call your financial advisor.