J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

7.13 When Retirement Benefits Must Begin

The longer you can delay taking retirement distributions from your company plan or self-employed Keogh plan, the greater will be the tax-deferred buildup of your retirement fund. To cut off this tax deferral, the law requires minimum distributions to begin no later than a specified date in order to avoid an IRS penalty. The required beginning date rules apply to distributions from all qualified corporate and self-employed Keogh plans, qualified annuity plans, and Section 457 plans of tax-exempt organizations and state and local government employers. The rules also apply to distributions from tax-sheltered annuities (7.21) but only for benefits accrued after 1986; there is no mandatory beginning date for tax-sheltered annuity benefits accrued before 1987.

You do not have to figure your required minimum distributions (RMDs). If you are not receiving an annuity, your plan administrator will determine the minimum amount that must be distributed each year from your account balance, based upon IRS regulations. The rules are similar to the traditional IRA rules (8.13).

If you do not receive your RMD for a year, a penalty tax applies, unless the IRS waives it, equal to 50% of the difference between what was received and what should have been received. The IRS may waive the penalty tax if you file Form 5329 and on an attached statement explain that a reasonable error caused the underpayment and the shortfall was or will be corrected.

Required beginning ...