RMD (Required Minimum Distribution)
Quick Definition
An RMD, or Required Minimum Distribution, is the annual withdrawal the IRS forces you to take from tax-deferred retirement accounts once you reach age 73. Skip it or miscalculate it, and you face a 25% excise tax on the shortfall, one of the harshest penalties in the entire tax code.
What It Means
The abbreviation RMD stands for Required Minimum Distribution, and it represents the moment the tax bill comes due on decades of tax-deferred growth. When you contributed to a traditional 401(k) or IRA over your working years, you deferred paying income tax on that money. The RMD is the IRS collecting on that deferral.
Under the SECURE 2.0 Act, the RMD starting age is 73 for anyone born between 1951 and 1959. If you were born in 1960 or later, your RMD age will be 75, but that provision does not take effect until 2033. For 2026, anyone turning 73 this year faces their first RMD.
The "minimum" in RMD is calculated using IRS life expectancy tables. The older you get, the shorter your life expectancy factor, and the larger your required withdrawal becomes. At age 73, you withdraw roughly 3.8% of your account balance. By age 85, it is about 6.3%. By age 95, it exceeds 11%.
Roth IRAs are exempt from RMDs during the original owner's lifetime. This is one of the biggest advantages of Roth accounts and a key reason many people do Roth conversions in their 60s. Read our Roth conversion guide to understand this strategy.
How It Works
The RMD Formula
Every year, you calculate your RMD using this formula:
RMD = December 31 account balance from prior year / IRS life expectancy factor
The IRS publishes three tables:
- Uniform Lifetime Table: Used by most account owners (assumes a beneficiary 10 years younger)
- Joint Life and Last Survivor Expectancy Table: Used if your spouse is your sole beneficiary and is more than 10 years younger than you
- Single Life Expectancy Table: Used by beneficiaries of inherited accounts
Key RMD Ages Under SECURE 2.0
| Birth Year | RMD Age | First RMD Year | First RMD Deadline |
|---|---|---|---|
| Before 1951 | 70.5 | Already started | Already passed |
| 1951 to 1959 | 73 | Year you turn 73 | April 1 of following year |
| 1960 or later | 75 | Starting 2033 | April 1 of following year |
Uniform Lifetime Table (Selected Ages)
| Age | Distribution Factor | RMD on $500,000 | RMD on $1,000,000 |
|---|---|---|---|
| 73 | 26.5 | $18,868 | $37,736 |
| 75 | 24.6 | $20,325 | $40,650 |
| 78 | 22.2 | $22,523 | $45,045 |
| 80 | 20.2 | $24,752 | $49,505 |
| 82 | 18.5 | $27,027 | $54,054 |
| 85 | 16.0 | $31,250 | $62,500 |
| 88 | 13.7 | $36,496 | $72,993 |
| 90 | 12.2 | $40,984 | $81,967 |
| 93 | 10.4 | $48,077 | $96,154 |
| 95 | 8.6 | $58,140 | $116,279 |
Accounts Subject to RMDs
| Account | RMD Required? | Special Rules |
|---|---|---|
| Traditional IRA | Yes at 73 | Can aggregate across multiple IRAs |
| SEP IRA | Yes at 73 | Can aggregate with traditional IRAs |
| SIMPLE IRA | Yes at 73 | Can aggregate with traditional IRAs |
| Traditional 401(k) | Yes at 73 | Must take separately per plan |
| 403(b) | Yes at 73 | Can aggregate across 403(b) accounts |
| 457(b) governmental | Yes at 73 | Separate from other plans |
| Roth IRA | No | No RMDs during owner's lifetime |
| Roth 401(k) | No | Eliminated starting 2024 |
The Still-Working Exception
If you are still employed at age 73 and your current employer's 401(k) plan permits it, you can delay RMDs from that specific plan until you retire. This exception does not apply to:
- IRAs (you must take IRA RMDs at 73 regardless of employment status)
- 401(k) plans from former employers
- Anyone who owns 5% or more of the business sponsoring the plan
The Two-RMD Trap
If you delay your first RMD until April 1 of the year after you turn 73, you must take two RMDs in that same calendar year. For example, if you turn 73 in 2026 and delay your first RMD to April 1, 2027, you must also take your 2027 RMD by December 31, 2027. Two taxable distributions in one year can push you into a higher tax bracket and increase your Medicare Part B and D premiums (which are based on income from two years prior).
Real-World Examples
Example 1: Calculating Your First RMD
Linda turns 73 in October 2026. Her traditional IRA balance on December 31, 2025 was $600,000.
| Item | Value |
|---|---|
| Age in 2026 | 73 |
| Prior year-end balance (Dec 31, 2025) | $600,000 |
| Uniform Lifetime Table factor (age 73) | 26.5 |
| 2026 RMD | $22,642 |
| Deadline (if taken in 2026) | December 31, 2026 |
| Deadline (if delayed) | April 1, 2027 |
Linda can take the $22,642 any time during 2026. If she waits until April 1, 2027, she must also take her 2027 RMD (based on her December 31, 2026 balance) by December 31, 2027.
Example 2: Aggregating IRA RMDs
Frank has three traditional IRAs at different brokerages:
| Account | Dec 31, 2025 Balance | Age 75 Factor | Required RMD |
|---|---|---|---|
| Fidelity IRA | $300,000 | 24.6 | $12,195 |
| Vanguard IRA | $200,000 | 24.6 | $8,130 |
| Schwab IRA | $100,000 | 24.6 | $4,065 |
| Total required | $600,000 | $24,390 |
Frank must withdraw $24,390 total for 2026. He can take it all from one IRA, split it between two, or take a portion from each. This aggregation rule applies only to IRAs, not to employer-sponsored plans like 401(k)s.
Example 3: The Penalty for a Missed RMD
George turned 73 in 2025 and was supposed to take a $30,000 RMD. He forgot and took nothing.
| Item | Amount |
|---|---|
| Required RMD | $30,000 |
| Amount withdrawn | $0 |
| Shortfall | $30,000 |
| Excise tax at 25% | $7,500 |
| Excise tax at 10% (if corrected within 2 years) | $3,000 |
| Ordinary income tax on $30,000 (at 22% bracket) | $6,600 |
| Total cost if not corrected promptly | $14,100 |
George should take the missed $30,000 distribution immediately, file Form 5329 with his tax return, and request the reduced 10% penalty by showing reasonable cause. The IRS is often willing to reduce the penalty for first-time mistakes.
Practical RMD Rules to Know
Qualified Charitable Distributions (QCDs)
At age 70.5 and older, you can direct up to $108,000 per year (2026 limit) from your IRA to a qualified charity. The QCD counts toward your RMD but is excluded from your taxable income. This is especially powerful for retirees who take the standard deduction (and therefore get no tax benefit from charitable contributions) and do not need the RMD money for living expenses.
Roth Conversions to Reduce Future RMDs
Converting traditional IRA money to a Roth IRA before age 73 reduces the balance subject to future RMDs. You pay income tax on the conversion amount now, but the converted money grows tax-free with no RMD requirements. This works best during low-income years, such as the gap between retirement and age 73, or before Social Security begins.
Inherited IRAs and the 10-Year Rule
If you inherit a traditional IRA from someone who died after December 31, 2019, you generally must empty the entire account within 10 years. There are exceptions for surviving spouses, minor children, disabled individuals, and beneficiaries not more than 10 years younger than the deceased. The 10-year rule can create a large tax bill if you wait until the final year to withdraw everything. Read our inherited IRA rules guide for details.
Key Points to Remember
- RMD stands for Required Minimum Distribution, the mandatory annual withdrawal from tax-deferred retirement accounts starting at age 73
- The SECURE 2.0 Act raised the RMD age to 73 for people born 1951 to 1959, and to 75 for people born 1960 or later (effective 2033)
- The RMD formula is simple: prior year-end account balance divided by an IRS life expectancy factor
- Roth IRAs have no RMDs during the owner's lifetime, making them a powerful tool for tax-free growth and estate planning
- The penalty for missing an RMD is 25% of the shortfall, reduced to 10% if corrected within two years
- IRA RMDs can be aggregated across multiple IRAs and withdrawn from any combination, but employer plan RMDs must be taken separately from each plan
- Qualified Charitable Distributions can satisfy RMD requirements without increasing taxable income
Common Mistakes to Avoid
- Forgetting the first RMD: The first RMD is due by April 1 of the year after you turn 73, which is easy to overlook because it falls in a different calendar year. Set a reminder for the year you turn 73.
- Triggering the two-RMD year: Delaying the first RMD to April 1 means taking two RMDs in one calendar year. This can push you into a higher tax bracket and increase Medicare premiums. Consider taking the first RMD by December 31 of the year you turn 73 instead.
- Missing RMDs from old 401(k) plans: If you left a 401(k) with a former employer, you must take RMDs from that plan starting at 73. The still-working exception only applies to your current employer's plan. Roll old plans into an IRA to consolidate.
- Not using QCDs if you are charitably inclined: A Qualified Charitable Distribution satisfies your RMD while excluding the distribution from taxable income. For retirees who do not itemize deductions, this is the most tax-efficient way to give to charity.
- Calculating RMD on the wrong balance: Use the December 31 balance from the prior year, not the current year. If your account grew significantly during the year, your RMD will be smaller relative to your current balance, which is fine.
- Ignoring the impact on Medicare premiums: RMDs increase your taxable income, which determines your Medicare Part B and D premiums two years later. Large RMDs can trigger Income-Related Monthly Adjustment Amount (IRMAA) surcharges that add hundreds of dollars per month to your Medicare costs.
Related Concepts
The RMD abbreviation appears throughout retirement and retirement planning discussions. The full rules are detailed in our Required Minimum Distribution guide. RMDs apply to tax-deferred accounts like a 401(k) and traditional IRA, and the withdrawals are taxed as ordinary tax income. Naming a beneficiary affects how your accounts are distributed after death. Some retirees purchase an annuity to create guaranteed income that works alongside RMD requirements. 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, use our retirement number calculator.
Frequently Asked Questions
Q: What does RMD stand for? A: RMD stands for Required Minimum Distribution. It is the minimum amount you must withdraw from tax-deferred retirement accounts (traditional IRA, 401(k), SEP IRA, etc.) each year starting at age 73. The IRS requires these withdrawals so that deferred taxes are eventually collected.
Q: At what age do RMDs start? A: RMDs start at age 73 for anyone born between 1951 and 1959 under the SECURE 2.0 Act. For anyone born in 1960 or later, the starting age rises to 75, but that change does not take effect until 2033. Your first RMD can be delayed until April 1 of the year after you reach the RMD age, but all subsequent RMDs must be taken by December 31 of each calendar year.
Q: How do I calculate my RMD? A: Divide your December 31 account balance from the prior year by the life expectancy factor from the IRS Uniform Lifetime Table for your age that year. For example, a 75-year-old with a $400,000 balance on December 31 of the prior year would divide $400,000 by 24.6 (the age 75 factor), resulting in an RMD of $16,260. Most brokerage firms calculate this for you automatically.
Q: What is the penalty for not taking an RMD? A: The penalty is 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 a $20,000 missed RMD, the 25% penalty alone is $5,000.
Q: Can I avoid RMDs with a Roth IRA? A: Yes. Roth IRAs have no RMDs during the original owner's lifetime. You can leave the money growing tax-free for as long as you live. Roth 401(k) accounts also eliminated RMDs starting in 2024 under SECURE 2.0. Converting traditional IRA or 401(k) money to Roth before age 73 can reduce or eliminate your future RMD obligations, though you pay income tax on the conversion amount.
