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

8.13 Mandatory Distributions From a Traditional IRA After Age 70½

The tax law requires that by April 1 of the year following the year in which you reach age 70½, you have to start receiving on an annual basis minimum distributions from your traditional IRAs under a schedule that meets IRS tests. The distributions will be fully taxable unless some of your IRA contributions were nondeductible (8.8). You cannot avoid tax on a required minimum distribution (RMD) by rolling it over to another account.

If you do not receive the required minimum amount, a penalty tax of 50% applies (unless the IRS waives it) to the difference between the amount that should have been received and the amount you did receive. For example, if you reach age 70½ in 2012, you may receive your first required minimum distribution (RMD) during 2012 or you may delay it until April 1, 2013, which is your “required beginning date.” Assume that, under the rules discussed below, your RMD for 2012 is $3,818, but you received only $3,000. Unless the IRS waives the penalty, you would have to pay a penalty of $409, 50% of the $818 shortfall.

If you are subject to a penalty, you should figure it on Form 5329, which must be attached to Form 1040. You can request a waiver of the penalty on Form 5329 if the failure to receive the proper amount was due to a reasonable error and you have or have or will make up for the shortfall; follow the Form 5329 instructions.

IRA owners and beneficiaries figure required minimum distributions ...