These tips can help retirees make required minimum distributions easy and tax penalty free

It’s almost time to turn the calendar over to a new year.

And if you’re retired or have inherited a retirement account, that means you’re on deadline to take your required minimum distributions by Dec. 31.

RMDs, as they are commonly known, are the minimum amount individuals who are age 70½ and older must withdraw from their retirement funds, such as individual retirement accounts or workplace-based plans such as 401(k)s. If you’ve inherited a retirement account, you may also have to make a withdrawal.

The amount you need to take out varies from year to year and is based on specific calculations, including what your account values were as of Dec. 31 the prior year, as well as your age.

The best time to get started on your RMD for this year is right now, because the paperwork may take some time to sort through.

And the sooner you start, the more likely you are to meet the deadline. (You have until April 1, 2020 if you just turned 70½ this year.) These tips can help.

In order to know how much you have to withdraw, you have to have an accurate picture of what you own.

Start by coming up with a list of those accounts.

“Always take an inventory first, so you know where all your retirement accounts are, so you don’t miss any,” said Ed Slott, CPA and founder of Ed Slott & Co. in Rockville Center, New York. It’s a good habit to get into and not only at RMD time, he said.

Also, be careful not to mistake an IRA for another type of account, which can lead you to miss your RMD, said Jeffrey Levine, director of financial planning at Blueprint Wealth Alliance in Garden City, New York.

Have your RMD calculation double-checked either by your financial institution or financial professional, Levine recommended.

That is because the initial math sometimes can be off. For example, if you’re married and have a spouse who’s more than 10 years younger, you could have a higher than necessary RMD if that’s not taken into account.

Or, if you did a rollover mid-year, your new custodian might not have your Dec. 31 account value, and consequently tell you you don’t need to take a withdrawal when you do.

“Just double-check and make sure you have the right amounts,” Levine said.

If you have multiple IRAs, you can take your total RMD from any one of those accounts.

That’s because of what’s called the aggregation rule.

However, with multiple IRAs, you still have to calculate the amount you take out based on the value of all of them, Slott said.

The same rule applies to multiple 403(b) retirement accounts, which you might have if you are or were an employee of a public school or tax-exempt organization.

That rules does not apply to 401(k) plans. If you have multiple 401(k) accounts, you have to take money from each one.

What’s more, you can’t take an RMD from an IRA to satisfy a 401(k), or vice versa.

“You can’t ever take from one category of account to satisfy an RMD on another one,” Slott said.

If you’re 70½ and still employed, you could get a break from taking your RMD, but only in certain circumstances, Slott said.

Generally, 401(k) plans have a still-working rule, which means you do not have to take the RMD until you retire.

Of course, there is a catch: You can only put off the RMDs if the plan is attached to the company where you’re currently employed. Other accounts — such as a 401(k) from a previous employer or IRAs — are excluded. So you do still have to take distributions from those.

“You only get the break on the plan of the company you’re still working for,” Slott said.

If you’ve inherited a retirement account, you may also be on the hook to take an RMD by the end of this year.

That generally doesn’t apply to you if you inherited the money from your spouse. That is because spouses can do a rollover and keep deferring those distributions, Slott said.

If you’re a non-spouse beneficiary, you likely still have to take a distribution by the end of this year. If you inherited the account in 2018, you will need to take your first RMD in 2019.

There’s more: This rule applies to both traditional IRAs, as well as Roth IRAs, Slott said.

RMDs from a Roth IRA will likely be tax-free. But if you’ve inherited one of these accounts and you fail to take that money out, you will have to pay a 50% penalty on the sum you should have taken.

How you deal with the taxes on your RMDs depends on your preference. But you should have a plan, Levine said.

If you pay estimated quarterly taxes, you may not want to withhold anything from your RMD.

Or, you may decide instead to withhold from your RMD rather than make those quarterly payments. Some of Levine’s clients withhold 100% of their RMD to avoid having to deal with estimated taxes throughout the year.

“There’s not necessarily a right or a wrong way to do that,” Levine said. The key is to find the right strategy for you, while making sure you take into account your other income and overall taxes you will owe, he said.