What Is a Required Minimum Distribution and When Does It Hit You?

You spent decades building up a tax-deferred retirement account. You let it compound. You did not touch it. Then, at age 73, the IRS steps in and requires you to start taking money out whether you want to or not.

That is a required minimum distribution, and it catches a surprising number of retirees off guard. Not because the rule is complicated, but because nobody explained it clearly during the saving years. This post fixes that.

What Is a Required Minimum Distribution?

A required minimum distribution (RMD) is the minimum amount the IRS requires you to withdraw from most tax-deferred retirement accounts each year, starting at age 73.

The accounts subject to RMDs include traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k) plans, 403(b) plans, and 457(b) plans. The key word in all those account types is "tax-deferred." The IRS allowed you to contribute pre-tax dollars and defer the tax bill for decades. Eventually, it wants that tax revenue. RMDs are the mechanism that forces distributions and therefore forces you to pay ordinary income tax on that money.

One important exception: Roth IRAs are not subject to RMDs during the account owner's lifetime. Money inside a Roth IRA was already taxed when contributed, so the IRS does not require you to take it out on any schedule. This is one reason Roth conversions become a meaningful strategy in your 60s, which we cover in What Is a Roth Conversion and Should You Do One Before Retirement?

According to the IRS, the required beginning date for your first RMD is April 1 of the year following the calendar year in which you turn 73.

How RMD Amounts Are Calculated

Your RMD is not a fixed percentage. It is calculated using your account balance and an IRS life expectancy table.

The formula:

RMD = Prior year-end account balance / IRS life expectancy factor

The IRS publishes the Uniform Lifetime Table in Publication 590-B. The life expectancy factor at age 73 is approximately 26.5. At age 80, it drops to about 20.2. The older you get, the smaller the divisor, which means a larger percentage of your account must come out each year.

Example calculation at age 73:

At age 80:

If you have multiple IRAs, you calculate the RMD for each account separately, but you can withdraw the total combined amount from any one or more of your IRAs. For 401(k) plans, RMDs must be taken separately from each plan.

When Exactly Do RMDs Hit?

The first RMD is due by April 1 of the year after you turn 73. Every subsequent RMD is due by December 31 of that calendar year.

This creates a timing trap in year one. If you wait until April 1 to take your first RMD, you will also owe your second RMD by December 31 of the same year. That means two RMDs in one calendar year, both of which count as ordinary income. For many retirees, this doubles their taxable income in year one and potentially pushes them into a higher bracket.

The better approach: Take your first RMD in the calendar year you turn 73, not April 1 of the following year. This spreads the income across two tax years instead of stacking two distributions in year two.

What happens if you miss an RMD? The penalty is steep. The IRS imposes a 25% excise tax on the amount you should have taken but did not. If you correct the error within two years, the penalty drops to 10%. This is reported on Form 5329. The penalty alone is a strong reason to set calendar reminders and automate RMD withdrawals.

The Tax Impact You Need to Understand

RMD withdrawals count as ordinary income. That means they are taxed at your marginal federal rate, plus any applicable state income tax. For most retirees, this is 22% or 24%.

More importantly, RMDs can trigger secondary effects:

• Social Security taxation: Up to 85% of your Social Security benefit becomes taxable if your combined income (adjusted gross income plus half of Social Security) exceeds $34,000 for single filers or $44,000 for married filing jointly. An RMD can push you over that threshold and increase your total tax bill significantly.
• Medicare premium surcharges (IRMAA): Medicare Part B premiums in 2026 start at $202.90 per month, but high-income beneficiaries pay more. Income above $109,000 (single) or $218,000 (joint) triggers surcharges. A large RMD two years prior can increase your Medicare premiums because IRMAA is based on income from two years ago.
• Net Investment Income Tax: If your modified adjusted gross income exceeds $200,000 (single) or $250,000 (joint), a 3.8% surtax applies to investment income.

This is why RMD planning is not just about withdrawing money. It is a tax management problem that intersects with Social Security, Medicare, and overall retirement income strategy. See our post on How to Decide When to Claim Social Security Benefits for how these income sources interact.

Real-World Examples

Example: Diane, 73, traditional IRA and 401(k)

Situation: Diane has a $650,000 traditional IRA and a $280,000 401(k) from a previous employer. She retired at 70 and has been living on Social Security and some savings. Now her first RMD is due.

Calculation: Her IRA RMD is $650,000 / 26.5 = $24,528. Her 401(k) RMD is $280,000 / 26.5 = $10,566. Total required withdrawal: $35,094.

Tax result: Combined with her $28,000 in annual Social Security benefits, her total income pushes her past the $34,000 threshold. Up to 85% of her Social Security is now taxable. She pays federal tax on roughly $59,000 of income, placing her solidly in the 22% bracket.

Example: Marcus, 67, planning ahead

Situation: Marcus has $900,000 in a traditional IRA and will not need the money for several years. He is in the 12% bracket today but expects to jump to 22% once RMDs start at 73.

Strategy: He does a partial Roth conversion of $30,000 per year for the next six years, staying within the 12% bracket. By the time he turns 73, his traditional IRA balance is smaller and his projected RMDs are lower. He also has a growing Roth IRA with no RMD requirement.

Result: His age-73 RMD is projected at $18,000 instead of $33,962. A significant difference in annual taxable income for the rest of his retirement.

Common Mistakes

Taking the RMD too late in the year. Waiting until December creates unnecessary stress and risk of missing the deadline. Set up an automatic annual withdrawal in January or February.

Forgetting inherited IRAs have their own RMD rules. If you inherited a traditional IRA after 2019, the SECURE Act 2.0 rules generally require the full balance to be withdrawn within 10 years. This is separate from your own RMD obligations and worth reviewing with a tax professional.

Assuming all accounts count together. 401(k) RMDs must be taken from each plan separately. You cannot take all your combined 401(k) and IRA RMDs from a single account. IRAs can be aggregated; 401(k)s cannot.

Reinvesting RMD funds into a tax-deferred account. Once money is distributed from a tax-deferred account as an RMD, it cannot be rolled back in. It can, however, be invested in a taxable brokerage account or contributed to a Roth IRA if you have earned income and meet contribution limits.

Strategies to Manage RMDs Proactively

The most effective RMD strategy is built before age 73, not after. Key moves:

• Roth conversions in your 60s: Converting portions of your traditional IRA to a Roth reduces your future RMD base. Each dollar converted is one fewer dollar subject to mandatory withdrawal. More on this in What Is a Roth Conversion and Should You Do One Before Retirement?
• Qualified charitable distributions (QCDs): If you are 70 1/2 or older, you can donate up to $105,000 directly from your IRA to a qualified charity. This counts toward your RMD but is excluded from your taxable income. For retirees who donate anyway, this is one of the cleanest tax moves available.
• Keep working: If you are still employed at 73 and participating in your current employer's 401(k), you may be able to delay RMDs from that specific plan until you retire. This does not apply to IRAs or old 401(k)s from previous employers.

Understanding how RMDs interact with your total retirement income picture connects directly to the Bucket Strategy for Retirement Income, which is worth reading alongside this post.

This post is for informational purposes only and does not constitute tax or financial advice. RMD rules are complex and subject to change. Individual circumstances vary significantly. Consult a qualified tax professional to review your specific situation.