You could be up against a deadline that will trigger a big tax penalty

If you are 70½ or older, or you have an inherited retirement account, you need to take a required minimum distribution for this year.

The official deadline to take that money out is Dec. 31. If you fail to meet that deadline, you face a 50 percent tax penalty on the amount of money you should have taken out.

But beware: You need to leave enough time for that RMD request to be processed by your financial institution or financial advisor, particularly if you need to sell investments in order to generate cash to take the distribution.

And because firms and financial advisors typically receive so many of these requests at this time of year, they may have set an earlier deadline for you to get your request in to make sure it is processed in time.

“There’s always those who wait until the last minute, and then they find that certain financial institutions or their advisors have a cut-off date,” said Ed Slott, founder of Ed Slott & Co. and an expert on IRAs.

“People think they have a week,” he said. “They might only have two, three or four days.”

Even if your firm or advisor doesn’t have a formal deadline for processing RMD requests, it’s best to act now if you’ve procrastinated.

“They all get the mad rush,” Slott said. “Even if they don’t announce a cut-off date, all of a sudden they can’t process everything in time.”

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