You can always withdraw more than you are required to from your IRAs and retirement
plans. However, if you fail to take at least the RMD for any year (or if you
take it too late),
you will be subject to a federal penalty. The penalty is a 25% excise tax
on the amount by which the RMD exceeds the distributions actually made to you during
the taxable year.
Example:
You own one traditional IRA and compute your RMD for year one
to be $7,000. You take only $2,000 as a year-one distribution. Since you are required to take at least $7,000 but have only taken $2,000, your RMD exceeds the amount of your actual distribution
by $5,000 ($7,000 minus $2,000). You are therefore subject to an excise tax of $1,250
(25% of $5,000).
Technical Note:
You will have a two-year period to correct a failure to take a timely RMD distribution, with a resulting reduction in the tax penalty to 10%. Basically, if you self-correct the error by withdrawing the required funds and filing a return reflecting the tax during that two-year period, you can qualify for the lower penalty rate.
