Required Minimum Distribution (RMD)

Quick Definition

A Required Minimum Distribution (RMD) is the smallest amount you must withdraw from your tax-deferred retirement accounts each year, starting at age 73 under current SECURE 2.0 Act rules. Failing to take your RMD triggers one of the steepest penalties in the tax code: a 25% excise tax on the amount you should have withdrawn but did not.

What It Means

The IRS gives you a tax break when you put money into a traditional 401(k), traditional IRA, SEP IRA, or similar tax-deferred account. Your contributions go in pre-tax, and the investments grow tax-free for decades. But the IRS does not let that money stay sheltered forever. At a certain age, you must start pulling money out and paying income tax on the withdrawals. That mandatory withdrawal is the Required Minimum Distribution.

The RMD system exists to prevent people from using tax-deferred accounts as permanent tax shelters. Without RMDs, you could leave money growing tax-free indefinitely and pass it to heirs who would also defer taxes. The RMD rules force the government to eventually collect tax on all that deferred income.

The SECURE Act of 2019 raised the RMD starting age from 70.5 to 72. The SECURE 2.0 Act of 2022 raised it again to 73 for anyone born between 1951 and 1959. For anyone born in 1960 or later, the RMD age rises to 75, but that change does not take effect until 2033. For 2026, the RMD age is 73 for most people approaching retirement.

Roth IRAs are the major exception. They do not have RMDs during the original owner's lifetime. You can leave money in a Roth IRA growing tax-free for as long as you live. Roth 401(k)s also eliminated RMDs starting in 2024 under SECURE 2.0, though you must still designate the account as Roth to avoid RMDs.

How It Works

Which Accounts Have RMDs?

When Do RMDs Start?

Your first RMD is due by April 1 of the year after you reach your RMD age. After that, every subsequent RMD is due by December 31 of that calendar year.

If you delay your first RMD to April 1, you must take two RMDs in that same calendar year: the first one by April 1 and the second one by December 31. This can push you into a higher tax bracket, so many people take their first RMD by December 31 of the year they turn 73 instead of waiting until April 1.

How Is the RMD Amount Calculated?

The RMD for each year is calculated by dividing your December 31 account balance from the prior year by a life expectancy factor from IRS tables.

RMD = Prior Year-End Account Balance / Life Expectancy Factor

The IRS uses the Uniform Lifetime Table for most account owners. The table assumes a beneficiary exactly 10 years younger than the owner, which produces a conservative (larger) RMD. If your spouse is your sole beneficiary and is more than 10 years younger than you, you use the Joint Life and Last Survivor Expectancy Table, which produces smaller RMDs.

As you age, the life expectancy factor shrinks, which means your RMD as a percentage of your account balance grows. By age 90, you are withdrawing roughly 8.2% of your balance each year.

RMDs Are Calculated Per Account Type

For IRAs (traditional, SEP, SIMPLE), you can calculate the RMD for each account separately and then take the total required amount from any one or combination of your IRAs. This gives you flexibility to withdraw from the account with the best investment options or lowest fees.

For employer plans (401(k), 403(b), 457(b)), you must calculate and take the RMD separately from each plan. You cannot satisfy a 401(k) RMD by taking a withdrawal from your IRA.

Real-World Examples

Example 1: First RMD at Age 73

Robert was born in June 1953. He turns 73 in 2026. His traditional IRA balance on December 31, 2025 was $750,000.

If Robert waits until April 1, 2027 to take his first RMD, he must also take his 2027 RMD by December 31, 2027. That means two taxable withdrawals in one year, which could push him into a higher tax bracket.

Example 2: Multiple IRAs Aggregated

Susan has three traditional IRAs with different balances:

Susan must withdraw $18,987 total, but she can take it all from one IRA or split it however she wants. She might take it all from IRA A if it has the highest fees or the worst investment options, keeping the better-performing accounts intact.

Example 3: The Penalty for Missing an RMD

Patricia turned 73 in 2025 and forgot to take her first RMD. Her required amount was $20,000.

Patricia owes a 25% excise tax on the $20,000 shortfall, which is $5,000. If she corrects the mistake within two years by taking the missed distribution and filing Form 5329, the penalty drops to 10%, or $2,000. She also owes ordinary income tax on the $20,000 withdrawal for the year it should have been taken.

Strategies to Manage RMDs

Roth Conversions Before Age 73

If you retire before age 73 and have years with low income, you can convert traditional IRA money to a Roth IRA during those gap years. You pay income tax on the conversion amount, but the converted money grows tax-free and is not subject to future RMDs. This strategy, described in our Roth conversion guide, can significantly reduce your RMD burden and lifetime tax bill.

Qualified Charitable Distributions (QCDs)

Starting at age 70.5, you can direct up to $108,000 (2026 limit) per year from your IRA directly to a qualified charity. The distribution counts toward your RMD but is excluded from your taxable income. This is one of the most efficient ways to satisfy RMD requirements while supporting charitable causes, especially for people who do not need the RMD money for living expenses.

Working Past 73

If you are still employed at age 73 and your employer's 401(k) plan allows it, you can delay RMDs from that specific 401(k) plan until you retire. This exception does not apply to IRAs or to 401(k) plans from former employers. It also does not apply if you own 5% or more of the business sponsoring the plan.

Key Points to Remember

• The RMD age is 73 for anyone born between 1951 and 1959, rising to 75 for anyone born in 1960 or later (effective 2033)
• Roth IRAs have no RMDs during the original owner's lifetime, and Roth 401(k) RMDs were eliminated starting in 2024
• The first RMD can be delayed until April 1 of the year after you reach RMD age, but all subsequent RMDs are due by December 31 each year
• RMDs are calculated by dividing the prior year-end account balance by an IRS life expectancy factor
• For IRAs, you can aggregate RMDs across multiple accounts and withdraw from any combination; for employer plans, each plan's RMD must be taken separately
• The penalty for missing an RMD is 25% of the shortfall, reduced to 10% if corrected within two years
• Qualified Charitable Distributions from an IRA can satisfy RMD requirements without increasing taxable income

Common Mistakes to Avoid

• Missing the first RMD deadline: The April 1 deadline for your first RMD is easy to miss because it falls in a different year than when you turn 73. Set a calendar reminder for the year you turn 73.
• Taking two RMDs in one year by accident: If you delay your first RMD to April 1, you must take your second RMD by December 31 of that same year. Two taxable distributions in one year can spike your tax bill and even push you into a higher Medicare premium tier.
• Forgetting RMDs from old employer plans: If you left a 401(k) with a former employer, you must take RMDs from that plan starting at age 73 even if you are still working elsewhere. Roll old plans into an IRA to simplify RMD management.
• Not using Qualified Charitable Distributions: If you are charitably inclined and over 70.5, QCDs are the most tax-efficient way to satisfy RMDs. You avoid income tax on the distribution while meeting the withdrawal requirement.
• Calculating RMDs on current year balance instead of prior year: The RMD is based on the December 31 balance from the prior year, not the current balance. If your account dropped significantly this year, your RMD may represent a larger percentage of your current balance than expected.
• Ignoring the 10-year rule for inherited IRAs: If you inherit a traditional IRA from someone who died after 2019, you generally must empty the account within 10 years. This is separate from your own RMD requirements but can create a large tax bill if you wait until year 10 to withdraw everything.

Related Concepts

Required Minimum Distributions connect to many aspects of retirement and retirement planning. The RMD rules apply to tax-deferred accounts like a 401(k) and traditional IRA, but not to Roth accounts. The withdrawals are taxed as ordinary tax income at your tax bracket rate. Naming a beneficiary for your retirement accounts determines what happens to the money after your death, including whether heirs face the 10-year distribution rule. Some retirees use an annuity to create guaranteed income that can work alongside RMDs. For practical guidance, read our RMD explained blog post and our guide on how much cash to keep in retirement. To estimate your retirement income needs, try our retirement number calculator.

Frequently Asked Questions

Q: Do Roth IRAs have Required Minimum Distributions? A: No. Roth IRAs do not have RMDs during the original owner's lifetime. You can leave the money growing tax-free for as long as you live. After your death, your beneficiary may be subject to RMD rules on the inherited Roth IRA, but the distributions remain tax-free. Roth 401(k) accounts also eliminated RMDs starting in 2024 under SECURE 2.0.

Q: Can I withdraw more than my RMD? A: Yes. The RMD is a minimum, not a maximum. You can withdraw any amount above the RMD. However, extra withdrawals cannot be applied to future years' RMDs. Each year's RMD must be satisfied with withdrawals taken during that calendar year (or by April 1 for the first year).

Q: What happens if I miss an RMD? A: You owe a 25% excise tax on the amount you failed to withdraw. If you correct the mistake within two years by taking the missed distribution and filing Form 5329, the penalty is reduced to 10%. You also owe ordinary income tax on the withdrawal for the year it should have been taken. File Form 5329 with your tax return to report and pay the penalty.

Q: Can I delay RMDs if I am still working? A: If you are still employed at age 73 and your current employer's 401(k) plan allows it, you can delay RMDs from that specific plan until you retire. This exception does not apply to IRAs, to 401(k) plans from previous employers, or to anyone who owns 5% or more of the business sponsoring the plan. Check your plan document to confirm whether the delay is allowed.

Q: Are RMDs taxed as ordinary income or capital gains? A: RMDs from tax-deferred accounts (traditional IRA, 401(k), etc.) are taxed as ordinary income at your regular tax bracket rates, not at the preferential capital gains rates. This is because the original contributions were made pre-tax, so the entire withdrawal (contributions plus earnings) is taxed as income when distributed. Roth account distributions, when qualified, are tax-free.