Retirement account: your required minimum distributions due by Dec. 31

A reminder to my readers: The deadline is approaching to take your required minimum distributions (RMDs). If you are over 70 1/2 and have a retirement account such as an IRA or 401K, December 31 is the deadline for withdrawing your annual RMD. (Exception: if this is your very first distribution, the deadline is April 1, 2014.) If you fail to take the required withdrawal or take anything less than the full required amount, you will pay a hefty 50% penalty on the amount you should have withdrawn. 

If you are financially secure enough to not need your RMD for living expenses, and/or want to avoid the income tax consequences from adding to your income with your RMD, consider contributing it to charity. Doing so will allow you to avoid paying income taxes on the withdrawal. Your RMD contribution must go directly to the charity; you cannot withdraw it and then write a check. It is unclear if you will have the same opportunity next year; the federal law providing for the Qualified Charitable Distribution Provision is set to expire in 2013; we do not yet know if Congress will renew it.

Lastly, ff you have a 401K, you may contribute to it until the end of the calendar year. In 2013, workers can contribute $17,5000 annually; if you are older than that, you can put in an additional $5,500.00.