Required Minimum Distribution (RMD)

The minimum amount the IRS requires you to withdraw from traditional retirement accounts each year starting at age 73 — ensuring the government eventually collects taxes on tax-deferred savings.

A Required Minimum Distribution (RMD) is a mandatory annual withdrawal from tax-deferred retirement accounts, imposed by the IRS to ensure that the tax-deferred savings eventually flow through the income tax system. Traditional IRAs, traditional 401(k)s, 403(b)s, SEP-IRAs, SIMPLE IRAs, and most other tax-deferred retirement accounts are subject to RMDs. The logic: these accounts were funded with pre-tax dollars (or deductible contributions), so the tax was deferred, not forgiven. The RMD rules force distributions — and the resulting taxable income — so the government eventually collects. Roth IRAs are exempt from RMDs during the original owner's lifetime; Roth 401(k)s were subject to RMDs until the SECURE 2.0 Act of 2022 eliminated this requirement starting in 2024.

The age at which RMDs begin has shifted several times through legislation. The SECURE Act of 2019 raised the starting age from 70½ to 72. SECURE 2.0 (2022) raised it again to 73 starting in 2023, and will increase it further to 75 starting in 2033 for those born in 1960 or later. The first RMD must be taken by April 1 of the year following the year you reach the starting age — and every subsequent RMD must be taken by December 31 of that calendar year. Delaying the first RMD to April 1 means two distributions in the second year (the delayed first and the normal second), which can significantly increase taxable income.

The RMD amount is calculated by dividing the account balance as of December 31 of the prior year by a life expectancy factor from IRS Publication 590-B's Uniform Lifetime Table. The table is based on your age as of the distribution year, and the factors decrease as you age — meaning you withdraw a larger percentage of the remaining balance each year. For example, at age 73 the factor is approximately 26.5, so you divide the prior year-end balance by 26.5 to get the minimum distribution. If the account balance is $500,000, the RMD at age 73 is approximately $18,868. Each subsequent year's RMD is recalculated using the updated balance and the age-appropriate factor.

Failing to take the full RMD by the deadline results in a substantial penalty — historically 50% of the amount not withdrawn, reduced to 25% by SECURE 2.0 (and further to 10% if corrected within two years). The IRS does grant automatic waivers in limited circumstances and has historically been lenient on first-time violations corrected promptly. RMDs cannot be rolled over to another retirement account or converted to a Roth IRA — they must be distributed and are taxable as ordinary income. Qualified charitable distributions (QCDs), however, allow taxpayers 70½ or older to direct up to $105,000 per year (inflation-adjusted) of IRA distributions directly to qualified charities, satisfying the RMD while excluding the distribution from taxable income.

RMD Basics

  • Starting age: 73 for those born 1951–1959; 75 for those born 1960 or later (SECURE 2.0).
  • Accounts subject to RMDs: traditional IRA, rollover IRA, SEP-IRA, SIMPLE IRA, traditional 401(k), 403(b), 457(b) (governmental), most inherited retirement accounts.
  • Accounts exempt from RMDs: Roth IRA (for the original owner during lifetime); Roth 401(k) as of 2024 (SECURE 2.0 eliminated Roth 401k RMDs).
  • Calculation: prior December 31 balance ÷ IRS Uniform Lifetime Table factor for your age = minimum distribution amount.
  • Multiple accounts: if you have multiple traditional IRAs, calculate the total RMD across all IRAs but you can aggregate and take the full amount from any one or combination of accounts.
  • 401(k) exception: if you're still working for the employer sponsoring the 401(k) at age 73, you may be able to delay RMDs from that specific 401(k) until you retire — this does not apply to IRAs or former-employer 401(k)s.

Tax Planning Around RMDs

  • RMDs are taxed as ordinary income in the year distributed — a large RMD can push you into a higher bracket and affect Medicare premium surcharges (IRMAA) and Social Security taxation.
  • Roth conversions before RMD age: converting traditional IRA/401(k) balances to Roth in the years between retirement and age 73 reduces the future RMD base — a 'Roth conversion ladder' strategy.
  • Qualified Charitable Distributions (QCDs): up to $105,000/year (2024) can be sent directly from an IRA to a qualified charity, satisfying RMD and excluding the amount from AGI — one of the most tax-efficient giving strategies available.
  • Withhold from RMDs: you can instruct the custodian to withhold federal and state income tax from your RMD, avoiding the need for estimated tax payments on distribution income.
  • IRMAA planning: Medicare Part B and D premiums are based on income from two years prior — large RMDs can trigger surcharges; coordinate RMD timing with a financial planner.

Inherited IRAs and RMDs

  • Inherited IRAs (post-2019 deaths): most non-spouse beneficiaries must empty the inherited IRA within 10 years of the original owner's death — the SECURE Act eliminated the 'stretch IRA' strategy.
  • Eligible designated beneficiaries (spouses, minor children, disabled individuals, those not more than 10 years younger) still have access to the stretch IRA — annual RMDs based on their life expectancy.
  • Spouse beneficiary: can roll the inherited IRA into their own IRA and restart RMD rules based on their own age; most flexibility of any beneficiary type.
  • Inherited Roth IRA: still subject to the 10-year rule for non-spouse beneficiaries, but distributions from an inherited Roth are generally tax-free.
  • Miss the 10-year deadline: the penalty is 25% of the amount that should have been distributed.

Example

A retired teacher has a traditional IRA worth $620,000 as of December 31 of the prior year. She turns 74 this calendar year. The IRS Uniform Lifetime Table factor for age 74 is 25.5. Her RMD: $620,000 ÷ 25.5 = $24,314. She must withdraw at least $24,314 by December 31. She elects to have 22% federal tax and 6% state tax withheld at distribution, receiving approximately $17,506 after tax. To reduce next year's RMD, her financial planner recommends a Roth conversion of $30,000 from a separate traditional IRA before year-end — reducing the balance subject to next year's calculation while she's still in a moderate tax bracket.