Excess Accumulation Penalty

DEFINITION of 'Excess Accumulation Penalty'

The penalty a retirement account owner or the beneficiary of a retirement account must pay when he or she fails to distribute a minimum amount due for a year from the retirement account.

BREAKING DOWN 'Excess Accumulation Penalty'

The failure to distribute this amount will result in the individual being subject to an excess accumulation penalty of 50 percent of the amount not distributed from the account. This amount is then owed to the IRS.

RELATED TERMS
  1. Distribution

    1. When trading volume is higher than that of the previous day ...
  2. Retirement Money Market Account

    A money market account that an individual holds within a retirement ...
  3. Mandatory Distribution

    The amount an individual must withdraw from certain types of ...
  4. Five-Year Rule

    If a retirement account owner dies before the required beginning ...
  5. Required Minimum Distribution - ...

    The amount that Traditional, SEP and SIMPLE IRA owners and qualified ...
  6. Hardship Withdrawal

    An emergency withdrawal from a retirement plan that may be subject ...
Related Articles
  1. Financial Advisors

    Required Minimum Distributions: A Reminder

    For many retirees with IRAs and other retirement plans, the end of the year means taking a minimum distribution. Here's what you need to know.
  2. Financial Advisors

    Multiple Accounts? Here's How to Calculate RMDs

    Ever wondered about how to calculate required minimum distributions on multiple accounts? Here's a quick primer.
  3. Retirement

    SIMPLE IRAs: Distributions

    By Denise Appleby Distributions from SIMPLE IRAs must occur eventually. Until required distribution rules apply, distributions are usually elective . The tax and penalty treatment of distributions ...
  4. Financial Advisors

    Retirement Savings: How Much is Enough?

    Sure, you can never save too much for retirement, but just how much is enough?
  5. Retirement

    Traditional IRAs: Distributions

    By Denise ApplebyDistributions from Traditional IRAs must occur eventually. Until the owner reaches the mandatory distribution age, distributions are optional. The tax and penalty applied to ...
  6. Retirement

    SEP IRAs: Distributions

    By Denise Appleby Because the funding vehicle for an SEP is a Traditional IRA, the distributions rules of a Traditional IRA also apply to SEP assets.Traditional IRA Distributions. Distributions ...
  7. Budgeting

    The Complete Guide To Retirement Planning For 40-Somethings: Retirement Resources

    Having even a general understanding of the rules that apply to your retirement account can help you effectively manage your transactions and avoid errors. The following are some of the publications ...
  8. Retirement

    When Is it Time to Stop Saving for Retirement?

    Successful retirement planning demands lots of saving and smart money management. But once you retire, how do you transition from saver to spender?
  9. Retirement

    Retirement Planning For 20-Somethings: Incorporating Lifecycles In Your Planning

    Inevitably, life changes will occur that necessitate modifications to your retirement planning strategies. Ignoring these changes can negatively impact your retirement planning, and could be ...
  10. Retirement

    What to Do If Your Retirement Account Takes a Hit

    A shrinking retirement account is scary at any age. Here's what to do if your retirement account takes a sudden hit.
RELATED FAQS
  1. How does a qualified retirement plan early distribution work?

    Weigh the pros and cons of taking an early distribution from a retirement account. Most early distributions are subject to ... Read Answer >>
  2. Is my non-qualified Roth IRA distribution subject to taxes or early distribution ...

    The ordering rules must be applied to determine whether the distribution is subject to income taxes and/or the early distribution ... Read Answer >>
  3. I made involuntary contributions to a retirement plan while temporarily employed. ...

    Your options depend on the type of penalty that would apply. If the penalty is a surrender charge or another penalty that ... Read Answer >>
  4. Does the IRS charge interest on penalties?

    Understand whether or not the IRS charges interest on penalties. Learn about the types of penalties that can be assessed ... Read Answer >>
  5. I failed to distribute an inherited 401(k) that was found in an audit. What happens ...

    The party responsible for paying the penalty in such cases will be the beneficiary of the 401(k) plan. You may want to start ... Read Answer >>
  6. Can mutual funds have beneficiaries?

    Learn about the different types of mutual fund ownership and the various ways beneficiaries can be established. One common ... Read Answer >>
Hot Definitions
  1. Goodwill

    An account that can be found in the assets portion of a company's balance sheet. Goodwill can often arise when one company ...
  2. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  3. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  4. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  5. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center