For decades you put money into traditional IRAs and 401(k)s, deferring taxes. At some point, the IRS requires you to start taking money out each year — required minimum distributions, or RMDs. Recent laws changed the starting age, and missing an RMD can be costly.
Key Takeaways
- Under the SECURE 2.0 Act, RMDs start at 73 for people born from 1951 through 1959, and at 75 for people born in 1960 or later.
- Your first RMD can be delayed until April 1 of the year after you reach your RMD age, but then you take two in one year.
- The RMD is generally your account balance on December 31 of the prior year divided by a life expectancy factor from IRS tables.
- Missing an RMD triggers a 25% excise tax on the shortfall, reduced to 10% if corrected promptly.
Tax rules are complex and change over time. Confirm details with the IRS or a tax professional.
Which accounts have RMDs
RMDs generally apply to:
- Traditional IRAs
- SEP and SIMPLE IRAs
- 401(k), 403(b) and 457(b) plans
- Other employer retirement plans
Roth IRAs do not require RMDs for the original owner. Since 2024, designated Roth accounts in employer plans, such as Roth 401(k)s, are also exempt from RMDs for the owner.
Inherited accounts have different rules.
When RMDs start
Under current law:
- Born 1951 through 1959: RMDs begin at 73.
- Born 1960 or later: RMDs begin at 75.
Deadlines
- First RMD: due by April 1 of the year after you reach your RMD age.
- Subsequent RMDs: due by December 31 each year.
If you delay your first RMD to April 1, you must still take your second RMD by December 31 of that same year. Two distributions in one year can push you into a higher tax bracket and affect Medicare premiums.
The still-working exception
If you are still working and participating in your current employer’s retirement plan, you may be able to delay RMDs from that plan until you retire, unless you own more than 5% of the business. This exception does not apply to IRAs.
How to calculate an RMD
For most account owners, the RMD is:
Account balance on December 31 of the previous year ÷ distribution period from the IRS Uniform Lifetime Table
The factor at age 73 is 26.5, at 75 is 24.6, and at 80 is 20.2.
Example
On December 31, your IRA balance was $400,000. This year you are 75.
$400,000 ÷ 24.6 ≈ $16,260
You must withdraw at least about $16,260 this year.
If your spouse is the sole beneficiary and more than 10 years younger, a different table (the Joint Life and Last Survivor Expectancy Table) applies, producing smaller RMDs.
Multiple accounts
- IRAs: calculate the RMD for each IRA separately, but you can withdraw the total from one or more IRAs.
- 403(b)s: similar aggregation rules apply among 403(b) accounts.
- 401(k)s and most other employer plans: each plan’s RMD must be taken from that plan.
Penalties for missing an RMD
If you take less than your RMD, the shortfall is subject to a 25% excise tax. If you correct the mistake within the correction window, the tax is reduced to 10%. You can also request a waiver if the shortfall was due to reasonable error and you are taking steps to fix it, using IRS Form 5329.
Strategies
- Plan withdrawals before RMD age. Withdrawing or converting to Roth in lower-income years can reduce future RMDs.
- Use qualified charitable distributions. From age 70½, you can donate directly from an IRA to qualified charities, up to an annual limit. QCDs can count toward RMDs and are excluded from taxable income.
- Withhold taxes from RMDs to cover tax liabilities.
- Set up automatic RMDs with your account custodian.
Frequently Asked Questions
Can I take more than the RMD? Yes. The RMD is the minimum. Withdrawing more is allowed but taxable.
Can I reinvest my RMD? You can invest it in a taxable account, but you cannot roll an RMD back into a tax-deferred account.
Do I have to sell investments to take an RMD? You can take an in-kind distribution of securities, although it still counts as taxable income.
Are RMDs taxed? Distributions from tax-deferred accounts are generally taxed as ordinary income.
The bottom line
RMDs begin at 73 or 75 depending on your birth year. Know your deadline, calculate the amount correctly, avoid doubling up in your first year if possible, and plan withdrawals earlier to manage taxes.
