A Required Minimum Distribution (RMD) is a mandatory annual withdrawal you must take from certain tax-deferred retirement accounts once you reach a specific age. The IRS created RMDs because tax-deferred accounts like traditional IRAs and 401(k)s allow you to delay taxes on contributions and growth indefinitely. RMDs ensure the government eventually collects that deferred tax revenue.
When RMDs Start: The SECURE 2.0 Change
Under the original SECURE Act (2019), the RMD starting age moved from 70.5 to 72. Under SECURE 2.0 (2022), it moved again to 73 for anyone born between 1951 and 1959, and to 75 for anyone born in 1960 or later.
If you turned 72 before January 1, 2023, the old rules apply and you were already required to begin distributions.
Which Accounts Require RMDs
RMDs apply to tax-deferred accounts:
- Traditional IRAs
- 401(k) plans
- 403(b) plans
- 457(b) plans (governmental)
- SEP IRAs and SIMPLE IRAs
Roth IRAs do not require RMDs during the account owner's lifetime. This is one of the major advantages of Roth accounts for estate planning. Inherited Roth IRAs generally do have distribution requirements for non-spouse beneficiaries.
How the Calculation Works
Each year, your RMD is calculated by dividing your prior year-end account balance by a life expectancy factor from the IRS Uniform Lifetime Table.
RMD = Prior year-end balance / IRS distribution period factor
For a 73-year-old, the IRS distribution period is 26.5 years. For a 75-year-old, it is 24.6 years. The factor decreases each year, so the percentage you must withdraw increases slightly with age.
Example: Account balance of $500,000 at year-end, owner turns 73 in the following year:
RMD = $500,000 / 26.5 = $18,868
If you have multiple traditional IRAs, the RMD is calculated separately for each, but you can take the total amount from any combination of your IRAs. 401(k) RMDs must be taken separately from each plan.
Consequences of Missing an RMD
The penalty for not taking your full RMD used to be 50% of the amount not withdrawn. SECURE 2.0 reduced it to 25%, and further to 10% if corrected within two years. These are still severe penalties. If you missed taking $10,000 of a required distribution, the 25% penalty is $2,500, in addition to the ordinary income taxes owed on the distribution.
Strategies to Reduce RMD Impact
Qualified Charitable Distributions (QCDs): If you are 70.5 or older, you can transfer up to $105,000 per year (indexed for inflation) directly from your IRA to a qualifying charity. This counts toward your RMD but is excluded from taxable income. For people who donate to charity anyway, this is one of the most tax-efficient ways to satisfy an RMD.
Roth Conversions before age 73: Converting traditional IRA funds to a Roth IRA before RMDs begin reduces the future balance subject to mandatory withdrawals. You pay income tax on the converted amount in the conversion year, but Roth funds grow tax-free and have no RMD requirements. This strategy works best in years when your taxable income is lower than it will be during RMD years.
Delay if still 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 exception does not apply to IRAs or old employer plans.
Calculate Your RMD
To find your required distribution for any age and account balance, use the RMD Calculator.