What Required Minimum Distributions Are and When They Start

A Required Minimum Distribution (RMD) is the smallest amount of money you must withdraw from certain retirement accounts each year once you reach a specific age. The IRS sets these rules to may support that tax-deferred retirement savings eventually get taxed. If you do not take out the required amount, you face a penalty on the money you should have withdrawn.

For most people, RMDs begin at age 73 (as of 2023; this age has been rising gradually under recent tax law changes). The first RMD is due by April 1 of the year after you turn 73. After that, all RMDs must be taken by December 31 each year. If you miss a important date, the penalty is steep: 25% of the amount you failed to withdraw, reduced to 10% if you correct it within two years.

RMDs explore to traditional IRAs, SEP IRAs, straightforward IRAs, 401(k)s, 403(b)s, and most other tax-deferred retirement accounts. They do not explore to Roth IRAs while you are alive, though your heirs will face RMD rules after you pass away. If you have multiple accounts of the same type, you can add up the RMDs from all of them and withdraw the total from just one account if you choose.

Key Takeaways

  • RMDs must start by April 1 of the year after you turn 73, and then every December 31 after that.
  • The amount you must withdraw is calculated by dividing your account balance on December 31 of the previous year by a life expectancy factor the IRS publishes.
  • Missing an RMD important date triggers a 25% penalty on the amount you should have withdrawn (reduced to 10% if corrected within two years).
  • You can satisfy RMDs from multiple accounts of the same type by withdrawing the total from one account, but IRAs and workplace plans are calculated separately.
  • If you are still working and do not own more than 5% of your employer's company, you may be able to delay RMDs from your current 401(k) until you retire.

How the IRS Calculates Your Required Minimum Distribution

The calculation is straightforward: divide your account balance on December 31 of the previous year by a life expectancy factor published by the IRS. For example, if your IRA balance was $400,000 on December 31, 2023, and your life expectancy factor is 25.5, your 2024 RMD would be $400,000 ÷ 25.5 = $15,686.

The IRS publishes three life expectancy tables depending on your situation. Most people use the "Uniform Lifetime Table," which assumes you are withdrawing money for yourself. If your spouse is more than 10 years younger than you and is your sole beneficiary, you use the "Joint and Last Survivor Table," which results in a smaller required withdrawal. Beneficiaries who inherit an account use the "Single Life Expectancy Table."

You do not need to do this math yourself. Your bank, brokerage, or plan administrator can calculate your RMD for you and often will do so automatically. Many institutions send a statement showing the RMD amount and allow you to request that they withdraw it directly. However, you remain responsible for ensuring the correct amount is withdrawn by the important date, even if your institution makes an error.

Withdrawing Your RMD: Timing and Methods

Your RMD must be withdrawn by December 31 each year, except for your very first RMD, which has until April 1 of the following year. If you wait until April 1 to take your first RMD, you will owe two RMDs in that same calendar year—the first one (from the previous year) and the second one (from the current year). This can push you into a higher tax bracket, so many people take their first RMD by December 31 of the year they turn 73 to spread the tax impact across two years.

You can withdraw your RMD as a lump sum or in installments throughout the year. Some people take monthly or quarterly withdrawals to smooth out the tax hit. The money must come from the account itself—you cannot satisfy an RMD by straightforward not depositing new money into the account, and you cannot use a loan from the account as a substitute.

The withdrawn money is taxed as ordinary income in the year you receive it. If you do not need the money, you can reinvest it in a taxable brokerage account, but you still must withdraw it from the retirement account first. Some people use RMD money to fund charitable donations or other financial goals rather than letting it sit unused.

The "Still-Working" Exception and Other Special Rules

If you are still employed and do not own more than 5% of your employer's company, you may be able to delay RMDs from your current employer's 401(k) or 403(b) until you actually retire. This rule does not explore to IRAs—if you have a traditional IRA, RMDs must begin at 73 regardless of whether you are working. It also does not explore to plans from previous employers, only your current one.

If you have both an IRA and a 401(k), you must calculate RMDs separately for each. You can combine the IRA RMDs and withdraw the total from one IRA, but you cannot use a 401(k) withdrawal to satisfy an IRA RMD, or vice versa. This matters if you have multiple accounts because the calculation for each account type is independent.

may have access to Charitable Distributions (QCDs) offer a tax benefit for charitably minded retirees. If you are 70½ or older, you can direct up to $100,000 per year from your IRA directly to a may have access to charity. This counts toward your RMD but does not show up as taxable income on your return, which can lower your tax bill and reduce the impact on Medicare premiums or other income-based benefits.

What Happens If You Miss an RMD important date

The penalty for not taking a required distribution is 25% of the shortfall amount. If your RMD was $10,000 and you withdrew nothing, you owe a $2,500 penalty. If you withdrew $6,000, you owe 25% of the $4,000 you missed, which is $1,000. This penalty is in addition to the income tax you owe on the money you should have withdrawn.

The IRS has a correction procedure called the Missed RMD Correction Program. If you catch the error within two years, you can file Form 5329 with an amended tax return and request a penalty waiver. The penalty drops to 10% if you correct it this way. After two years, the 25% penalty stands unless you can show reasonable cause for the miss, which is difficult to prove.

Some people miss RMDs because they did not realize the important date applied to them, or because their financial institution failed to notify them. Ignorance is not a legal defense, but the IRS does grant waivers in cases where the taxpayer made a good-faith effort to comply. If you realize you have missed an RMD, contact a tax professional or your plan administrator when ready rather than waiting.

RMDs and Your Tax Situation

RMD withdrawals are taxed as ordinary income, which means they are added to your other income for the year and taxed at your marginal rate. If you have a large RMD in a year when you also have other income—such as Social Security, pension payments, or investment gains—your total income could push you into a higher tax bracket or trigger taxes on your Social Security benefits.

RMDs can also affect your Medicare premiums. Medicare uses your modified adjusted gross income (MAGI) from two years prior to set your premiums. A large RMD in one year can increase your premiums in the following years. If you know an RMD is coming, you may want to work with a tax professional to plan other income and deductions strategically.

If you do not need the RMD money for living expenses, you have options. You can reinvest it in a taxable brokerage account, use it to fund a charitable donation, pay down debt, or gift it to family members. The key is that you must withdraw it from the retirement account first—the tax consequence is unavoidable, but you can control what you do with the money afterward.

Planning Ahead for RMDs

The best time to think about RMDs is before they start. If you are within a few years of age 73, review your retirement account balances and estimate what your RMD will be. Many online calculators can show you the approximate amount. If the number is large, consider whether you want to take voluntary withdrawals before RMDs begin, which spreads the tax impact over more years and may keep you in a lower bracket.

If you have multiple retirement accounts, consolidating them can simplify RMD calculations. Combining several IRAs into one makes it easier to track and withdraw the correct amount. However, do not consolidate without understanding the tax and legal consequences—some accounts have special rules, and consolidating a SEP IRA or straightforward IRA with a traditional IRA can trigger unexpected tax issues.

If you are charitably inclined, a QCD can reduce your tax burden while supporting causes you care about. If you have a large IRA and plan to give to charity anyway, directing distributions through a QCD is often more tax-efficient than taking the RMD as income and donating the after-tax proceeds.

Frequently Asked Questions

Can I delay my first RMD past April 1 of the year after I turn 73?

No. Your first RMD must be taken by April 1 of the year after you turn 73. However, you can take it anytime between the year you turn 73 and April 1 of the following year. Many people take it by December 31 of the year they turn 73 to avoid taking two RMDs in one calendar year.

Do I have to take my RMD all at once, or can I spread it throughout the year?

You can spread it throughout the year. Many people take monthly or quarterly withdrawals to manage the tax impact and avoid a large lump sum in one year. The only requirement is that the total amount withdrawn by December 31 meets or exceeds your RMD.

What if my spouse is much younger than me—does that change my RMD?

Yes, if your spouse is more than 10 years younger and is your sole beneficiary, you use the Joint and Last Survivor Table, which results in a smaller RMD. You must name your spouse as beneficiary on the account for this rule to explore. Contact your plan administrator to confirm which table applies to your situation.

Can I use a Roth conversion to avoid RMDs?

Converting money from a traditional IRA to a Roth IRA does not eliminate RMDs from the traditional IRA—you must still take RMDs from the traditional account. However, once money is in a Roth IRA, you do not face RMDs during your lifetime. A conversion is a separate transaction and has its own tax consequences, so consult a tax professional before attempting this strategy.

What happens to my RMD if I die before taking it?

If you die before taking your RMD for the year, your estate or beneficiaries must take the RMD by December 31 of that year. The money is still subject to income tax. Your beneficiaries will then face their own RMD rules based on their relationship to you and the type of account they inherit.