Are you an IRA owner who turned 70 1/2 last year? If you haven't already started tapping your traditional IRA, then April 17 isn't the only IRS deadline you need to heed this year. You're also required to take your first minimum withdrawal no later than April 1. That's right, April Fool's Day. But this is no joke.
The tax law states that you must start taking mandatory payouts from traditional IRAs (but not from Roths) no later than April 1 of the year after the year you turn 70 1/2. So if you turned 70 1/2 in 2011, that deadline is rapidly approaching. Of course this also means you get stuck with the resulting income-tax bills. (The whole idea here is to make people who would otherwise leave their IRAs untouched to start taking taxable withdrawals.) And if you fail to take at least the minimum withdrawal amount by April 1, the IRS can sock you with a penalty equal to 50% of the shortfall. So this little rule isn't something you can afford to ignore.
Now, if you already took IRA withdrawals last year (or earlier this year) that equaled or exceeded the amount of your initial required minimum withdrawal for 2011, then you're blissfully unaffected by the April 1 deadline. But you must take your 2012 required minimum withdrawal by 12/31/2012 to avoid the 50% penalty.
If you didn't take a withdrawal last year, then you'll need to figure out how much to withdraw from your IRA and do so by April 1. To help you calculate your initial required minimum withdrawal, use a joint life-expectancy figure which is generally based on your age and someone 10 years your junior. (Even those who don't have a designated beneficiary use the joint-life-expectancy figure.) After you take your withdrawal for 2011, you must take your 2012 withdrawal by 12/31/2012 to avoid the 50% penalty. For more on calculating minimum IRA withdrawals, read our story here.
Keep in mind that the IRA minimum-withdrawal rules also apply to simplified employee pension (SEP) accounts and SIMPLE IRAs because they're also considered traditional IRAs for this purpose. Roth IRAs, on the other hand, are exempt from the minimum-withdrawal rules as long as the original account owner (that would be you) is alive.