• Take your required minimum distribution, or pay a penalty.Accounting and finances image by MAXFX from Fotolia.com
  
  In certain circumstances, you must take required minimum distributions from your individual retirement account or pay a penalty to the Internal Revenue Service. IRAs are tax-preferred accounts, but the IRS does not let you shelter your assets indefinitely. If you are not required to take RMDs in your lifetime, it will be up to your IRA beneficiary to drain the account.
  
  

Roth IRAs

• Roth IRAs are unique, in that you do not have to take RMDs from them in your lifetime. You can leave a Roth IRA untouched, and even continue contributing earned income to it, for as long as you live.
  
  

Traditional, SEP and SIMPLE IRAs

• Traditional, simplified employee pension (SEP) and savings-incentive match plans for employees (SIMPLE) IRAs are all funded with "pretax" contributions, which are are entirely tax-deductible. Therefore, to increase the chances that you will pay income tax on the distributions in your lifetime, the IRS requires you to begin taking RMDs from these accounts the year you turn 70 1/2.
  
  

Inherited IRAs

• If you are an IRA beneficiary and choose to roll the account over into an inherited IRA (as opposed to withdrawing the assets immediately) you must begin taking RMDs by Dec. 31 in the year following the original account owner's death. If the original owner was required to take an RMD and had not done so, you must withdraw what would have been his RMD by Dec. 31 in the year he dies.
  
  

Penalty

• If you are required to take an RMD but fail to do so, the IRS charges a 50 percent penalty on the amount you should have withdrawn. For example, if your 2010 RMD was $2,000 and you did not withdrawal that amount by Dec. 31, you would owe the IRS a $1,000 penalty by your 2011 filing deadline. It is to your benefit to take RMDs, or else risk losing a substantial portion of your assets to taxes.