Required Minimum Distributions (RMDs) Explained

A required minimum distribution (RMD) is the amount the IRS makes you withdraw from most tax-deferred retirement accounts each year once you reach a certain age. The government let that money grow tax-deferred for decades; RMDs are how it finally collects the tax. Miss one and the penalty is severe, so this is worth understanding before you get there.

When do RMDs start?

Under current law, RMDs begin at age 73 for people reaching that age now, and the starting age is scheduled to rise to 75 in 2033 (see IRS RMD FAQs). Your first RMD can be delayed until April 1 of the year after you turn 73, but doing so means taking two in one year.

Which accounts have RMDs?

• Traditional IRAs, SEP and SIMPLE IRAs, and most 401(k)/403(b) plans — yes.
• Roth IRAs — no RMDs during the original owner's lifetime, one of the Roth's biggest advantages. Roth 401(k)s no longer have lifetime RMDs either.
• Inherited accounts follow separate beneficiary rules (often a 10-year payout) — see our directory's beneficiaries & documents resources.

How is an RMD calculated?

Your RMD is your account balance on December 31 of the prior year divided by a life-expectancy factor from the IRS Uniform Lifetime Table. In practice your plan or IRA custodian usually calculates it for you, but you are ultimately responsible for taking the right amount. You can see how withdrawals interact with your balance using our retirement savings calculator and plan your overall number with how much do you need to retire.

The penalty for missing an RMD

Missing an RMD triggers an excise tax on the amount you failed to take — historically 50%, reduced to 25% (and 10% if corrected promptly) under recent law. Either way it is one of the harshest penalties in the tax code, so set a reminder or automate the withdrawal.

Ways to soften the tax hit

• Qualified Charitable Distributions (QCDs) let those 70½+ send IRA money straight to charity, satisfying the RMD without adding to taxable income.
• Roth conversions before RMD age shrink the balance that will be subject to future RMDs — see how Roth accounts grow tax-free and plan around taxes in retirement where available.

Common questions about RMDs

At what age do RMDs start?

Age 73 under current law, rising to 75 in 2033.

Do Roth IRAs have RMDs?

No — not during the original owner's lifetime. That's a key reason Roth accounts are valuable for legacy and tax planning.

What happens if I miss one?

You owe a 25% excise tax on the shortfall (10% if corrected promptly), plus the ordinary income tax. Automate it to be safe.

Sources

• IRS — RMD FAQs
• IRS Publication 590-B (distributions from IRAs)

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