Retirement savings are designed to support you after you stop working, but certain retirement accounts come with rules about when you must begin withdrawing money. These withdrawals are called Required Minimum Distributions (RMDs). Understanding these rules can help you avoid unexpected taxes, plan retirement income, and manage your savings more effectively.
RMDs are particularly important for Americans who have traditional Individual Retirement Accounts (IRAs), 401(k) plans, and other tax-deferred retirement accounts. The amount you must withdraw depends on factors such as your account balance, age, and beneficiary arrangements.
In this guide, we explain what RMDs are, when you must take them, how they are calculated, and what happens if you miss a required withdrawal.
What Are Required Minimum Distributions (RMDs)?
Required Minimum Distributions are minimum amounts that the IRS generally requires you to withdraw annually from certain retirement accounts after reaching the applicable starting age.
Traditional retirement accounts often provide tax advantages while you save. For example, eligible traditional IRA contributions may be tax-deductible, and investments can grow tax-deferred. However, the IRS eventually requires withdrawals so that the money can be taxed under the applicable rules.
RMDs generally apply to traditional IRAs, SEP IRAs, SIMPLE IRAs, and most employer-sponsored retirement plans, including traditional 401(k) plans.
The rules differ by account type. Original account owners generally do not have lifetime RMDs from Roth IRAs. Designated Roth accounts in employer plans also generally no longer require lifetime RMDs for the original account owner beginning in 2024.
When Must You Start Taking RMDs?
Your RMD starting age depends on your birth year and the type of retirement account you own.
Under current federal rules, the applicable starting age is generally 73 for people born from 1951 through 1959 and 75 for people born in 1960 or later.
For traditional IRA owners, the first RMD is generally due by April 1 of the year following the year they reach their applicable starting age.
For example, if you reach age 73 in 2026, your first RMD would generally need to be taken by April 1, 2027.
However, delaying your first RMD means you may need to take two distributions in the following year: the first year’s RMD by April 1 and the next year’s RMD by December 31.
After the first distribution year, annual RMDs are generally due by December 31.
Employer-sponsored plans may have an exception that allows some employees who continue working for the plan sponsor to delay RMDs until retirement. This exception generally does not apply to traditional IRAs or certain employees who own more than 5% of the business.
Because account type, birth year, and employment status matter, confirm your required beginning date with your plan administrator or tax professional.
How Are Required Minimum Distributions Calculated?
The RMD calculation generally uses your retirement account balance at the end of the previous year and an applicable life expectancy factor from IRS tables.
A simplified formula is:
RMD = Previous Year-End Account Balance ÷ Applicable Distribution Period
For example, suppose your traditional IRA had a balance of $200,000 on December 31 of the previous year. If your applicable distribution period were 26.5 years, the estimated RMD would be:
$200,000 ÷ 26.5 = approximately $7,547
This is an illustrative calculation, not a personalized RMD estimate. Your actual distribution period depends on your age and applicable IRS table. Special rules may apply if your spouse is your sole beneficiary and is more than 10 years younger than you.
If you have multiple traditional IRAs, you generally calculate the RMD separately for each account, but you can usually withdraw the combined IRA amount from one or more of those IRAs.
Employer retirement plans generally have their own calculation and aggregation rules. You typically cannot use an IRA withdrawal to satisfy an RMD from a separate 401(k).
Which Retirement Accounts Require RMDs?
Different retirement accounts follow different withdrawal rules.
Traditional IRAs
Traditional IRAs generally require annual minimum withdrawals once you reach the applicable starting age. The amount depends on the account balance and IRS distribution factors.
401(k) and Similar Employer Plans
Traditional 401(k), 403(b), and certain other employer retirement plans generally require RMDs. The timing can depend on your age, retirement status, and plan rules.
SEP and SIMPLE IRAs
These accounts generally follow traditional IRA RMD rules. If you have multiple retirement accounts, review each account separately to determine your obligations.
Roth IRAs
Original owners of Roth IRAs generally do not have lifetime RMD requirements. This allows eligible funds to remain in the account without mandatory lifetime withdrawals.
Inherited Roth IRAs may still be subject to distribution requirements. Beneficiaries should review the rules that apply to their situation.
Are Required Minimum Distributions Taxable?
RMDs from traditional retirement accounts are generally taxable as ordinary income, except to the extent a distribution represents after-tax basis or another amount that is not taxable under applicable rules.
For example, if you withdraw $8,000 from a traditional IRA funded entirely with pre-tax money, that amount will generally be included in your taxable income for the year.
RMD income may affect your federal income tax bracket, the taxation of Social Security benefits, and certain income-based Medicare premiums.
RMDs are not generally eligible to be rolled over into another retirement account. You should therefore avoid treating a required distribution like an ordinary rollover.
Some taxpayers may be able to make a qualified charitable distribution directly from an eligible IRA to an eligible charity. If the requirements are met, the distribution may count toward an RMD while receiving different tax treatment. Specific eligibility rules apply.
What Happens If You Miss an RMD?
Failing to withdraw the required amount by the deadline can result in an excise tax on the shortfall.
Under current federal rules, the standard excise tax is generally 25% of the amount not distributed as required. It may be reduced to 10% if the shortfall is corrected within the applicable correction window and other requirements are satisfied.
For example, if your RMD is $10,000 but you withdraw only $6,000, the shortfall is $4,000. A potential 25% excise tax on that shortfall would be $1,000 before considering any available correction or waiver.
If you miss a distribution, contact your retirement plan administrator and consult a qualified tax professional. You may need to withdraw the missing amount and file the appropriate IRS form to request relief where eligible.
How Can You Prepare for RMDs?
Planning ahead can help you manage withdrawals without disrupting your broader retirement strategy.
Review Your Retirement Accounts
Make a list of your IRAs, 401(k)s, and other retirement accounts. Record the account type, balance, beneficiary details, and applicable RMD deadline.
If you are unsure whether your savings are on track, our guide to retirement savings by age explains common retirement benchmarks and the factors that can affect your savings target.
Estimate Your Future Withdrawals
Use your previous year-end account balances and the applicable IRS tables to estimate upcoming distributions. Revisit your estimates annually because account values and distribution factors can change.
Consider the Tax Impact
Think about how RMD income could affect your overall tax situation. You may need to adjust withholding or estimated tax payments to account for taxable withdrawals.
Organize Your Savings and Cash Flow
RMDs can become part of your retirement income plan, helping cover living expenses, healthcare costs, or other financial needs.
Understanding how compound interest grows savings can also help you appreciate how retirement balances may change over time, although investment returns are not guaranteed.
Automate Where Appropriate
You may be able to schedule recurring distributions through your retirement account provider. If you choose this option, verify that the total withdrawn by the deadline meets the annual requirement. Our guide to automating your finances explains how scheduled financial transactions can help you stay organized.
Final Thoughts
Required Minimum Distributions are an important part of retirement planning for Americans with traditional IRAs, 401(k)s, and other qualifying retirement accounts. Knowing your starting age, calculating the required amount, and meeting the annual deadline can help you avoid unnecessary tax complications.
Review your retirement accounts regularly, understand the rules for each account type, and plan for the potential tax impact of withdrawals. If your situation involves inherited accounts, employer-plan exceptions, or charitable distributions, consider professional guidance before making decisions.
This article provides general educational information, not individualized tax advice. Always confirm current IRS rules and your specific RMD obligations before taking action.
