Five Big Tax Penalties To Avoid At All Costs
Taxes are a necessary evil, but you don't want to make matters worse by paying unnecessary federal tax penalties. Here are five to avoid:1. Not taking required minimum distributions. This is the granddaddy of tax penalties. After you reach age 70½, you must begin taking annual "required minimum distributions" (RMDs) from your tax-advantaged retirement plans (unless you're still working) and from traditional IRAs. (For the year you turn 70½, you can postpone the payout until April 1 of the following year, but that will require you to take two withdrawals in the same calendar year.) The RMD is based on...
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