Your Guide to Required Minimum Distributions (RMDs)

Retirement planning involves a lot, from managing your tax obligations to making sure your income covers your needs.

As you build a withdrawal strategy, keep in mind that the IRS requires regular withdrawals from tax-deferred accounts starting at age 73 (75 for those born in 1960 or later). These are called required minimum distributions, or RMDs.

Understanding what your distribution requirements will be over the course of your retirement can help ensure that you don’t find yourself on the hook for a substantial tax penalty. Further, coming up with a plan ahead of time can help you manage your tax liability and provide you with more options for allocating your required distributions. Learn more about what every retiree should know about RMDs.

What Are RMDs for?

Many retirement accounts, including traditional IRAs and pre-tax 401(k) accounts, offer tax-deferred growth. Withdrawals of pre-tax contributions and earnings are generally subject to income tax. Some accounts also include previously taxed contributions, or basis, which are not taxed again when withdrawn. Required minimum withdrawals bring money out of these tax-deferred accounts over time.

Who Are RMDs for?

Under the SECURE 2.0 Act, the RMD starting age is:

• 73 for people born between 1951 and 1959
• 75 for people born in 1960 or later

You can delay your first RMD until April 1 of the year after you reach that age, but then you'll take two distributions in one tax year. After that, RMDs are due by December 31 each year, gradually drawing down your accounts over retirement.

Some employees can delay RMDs from their current employer's plan until retirement, subject to ownership restrictions and the plan's rules. That exception does not extend to traditional IRAs or automatically apply to a former employer's plan. The IRS RMD FAQs explain the distinctions. Accounts generally subject to RMDs include:

• Traditional IRAs
• SEP IRAs
• SIMPLE IRAs
• 401(k) plans
• 403(b) plans
• 457(b) plans
• Profit sharing plans
• Other defined-contribution plans

RMDs do not apply to Roth IRAs during the owner's lifetime, and since 2024 they no longer apply to designated Roth 401(k) and Roth 403(b) accounts during the owner's lifetime either. Beneficiary distribution rules still apply after death.

Inherited accounts follow separate rules. Many non-spouse beneficiaries must empty the account within 10 years; affected beneficiaries may also have annual RMDs during that window if the original owner died on or after their required beginning date. That legal date matters, not simply whether the owner happened to have taken a withdrawal. Beneficiary status and account type affect the result, as explained in IRS Publication 590-B.

How Are RMDs Calculated?

Your RMD depends on your age and your account balance. To find it, generally divide the account balance on December 31 of the preceding year by the applicable distribution period, an IRS figure that represents years of life expectancy.

As you get older, the distribution period shrinks, so the share of your account you must withdraw increases.

The IRS provides worksheets and life-expectancy tables for these calculations. Use the applicable current guidance rather than assuming the tables change every year.

You can withdraw more than the minimum, but that does not reduce a later year's requirement. Calculate each account's RMD separately, then check where the withdrawal may come from.

You can generally total the RMDs for your traditional IRAs and withdraw that total from one or more of those IRAs. Each 401(k) plan's RMD must be satisfied separately. Other account types, including inherited accounts and 403(b) arrangements, have their own rules; do not assume every retirement account can be combined.

What’s the Penalty for Missing an RMD?

Missing an RMD, or withdrawing too little, can be costly:

• The penalty is an excise tax of 25% of the shortfall (reduced from 50% by SECURE 2.0). For example, if your RMD is $6,000 and you withdraw only $4,000, you'd owe $500 on the $2,000 shortfall.
• Correct within the applicable window, and the excise tax may be reduced to 10% if the requirements are met.
• If you missed it for a reason the IRS considers legitimate, you may qualify for a full waiver by filing Form 5329 with an explanation.

The correction window ends at the earliest of a deficiency notice, assessment of the tax or the end of the second taxable year after the year the tax is imposed. The Form 5329 instructions explain the correction process and potential waiver for reasonable error; coordinate a missed distribution with your tax professional.

Ways to Soften the Tax Hit

• Qualified charitable distributions. Once you reach age 70½, an eligible QCD can go directly from your IRA to an eligible charity and count toward an applicable RMD. The annual exclusion limit is $111,000 per eligible individual for 2026, confirmed in IRS Notice 2025-67. The same excluded gift is not also a charitable deduction; our QCD guide explains the requirements.
• Roth conversions before RMD age. Converting part of a traditional IRA can reduce future RMDs, but the conversion itself creates taxable income and may affect Medicare premiums. Compare the current tax cost with future scenarios; our Roth conversion and IRMAA guide explains the timing.
• Withholding. You can have federal tax withheld from an RMD in lieu of making quarterly estimated payments, which simplifies tax compliance in retirement.

Make a Plan for Your RMDs

Your RMD is one part of your retirement cash flow, not a standalone decision. Coordinate required withdrawals with spending, other income, charitable intentions and your investment portfolio.

Schedule a free, no-obligation introductory meeting with Todd to discuss how required withdrawals fit your broader retirement plan.

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