Required Minimum Distributions (RMDs): Rules & Planning
When RMDs start, how to calculate the required amount, the penalty for missing one, and strategies to reduce future RMDs.
Required minimum distributions are mandatory annual withdrawals from traditional IRAs and 401(k)s starting at age 73, calculated by dividing last year’s December 31 balance by an IRS life expectancy factor.
What you'll walk away with
Skim these first — then dig into the details below.
- 1RMDs begin at age 73 for traditional IRAs and 401(k)s.
- 2The penalty for missing one is 25% of the shortfall, reduced to 10% if corrected promptly.
- 3RMD equals the prior year-end balance divided by an IRS life expectancy factor.
- 4Roth IRAs — and, since 2024, Roth 401(k)s — have no lifetime RMDs.
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Tax-deferred retirement accounts are a loan from the government, not a gift. Eventually the IRS wants its share, and required minimum distributions are how it collects. Starting at age 73, you must withdraw a set amount each year from traditional accounts whether you need the money or not.
Plan how RMDs interact with your other income using the retirement calculator, and project your future balance with the 401(k) calculator.
Which accounts have RMDs and when
Not every retirement account is subject to the rules, and the starting age has shifted with recent legislation.
- Subject to RMDs: traditional IRA, SEP IRA, SIMPLE IRA, traditional 401(k), 403(b), and 457(b).
- Not subject during your lifetime: Roth IRA, and Roth 401(k) beginning in 2024.
- Starting age is 73 for those born between 1951 and 1959, and 75 for those born in 1960 or later.
- Your first RMD may be delayed to April 1 of the following year — but that stacks two RMDs into one tax year.
- Inherited accounts follow separate rules, typically requiring full distribution within ten years.
How to calculate your RMD
The math is straightforward, and your custodian will usually compute it for you. Verifying it is still worth ten minutes, because the penalty falls on you, not on them.
- 1
Find the balance of each account as of December 31 of the prior year.
- 2
Look up your distribution period in the IRS Uniform Lifetime Table.
- 3
Divide the balance by that factor to get the required amount.
- 4
Repeat for each account — IRAs can be aggregated, but each 401(k) must be taken separately.
- 5
Withdraw the total by December 31.
Strategies to reduce future RMDs
The best time to manage RMDs is in the years between retiring and turning 73, when your taxable income is often at its lowest.
- Roth conversions in low-income years move money out of the RMD base permanently.
- Spend from traditional accounts first in early retirement — see our withdrawal order guide.
- Qualified charitable distributions let those 70½ and older send up to $105,000 directly to charity, satisfying the RMD tax-free.
- If you are still working past 73 and do not own 5% of the company, you may delay RMDs from that employer’s plan.
- Contribute to Roth accounts during your career — compare in traditional versus Roth 401(k).
Avoiding the penalty
Missing an RMD is one of the most expensive routine mistakes in retirement, and it is entirely preventable.
- The penalty is 25% of the amount you failed to withdraw.
- It drops to 10% if you correct the shortfall within two years and file Form 5329.
- Set up automatic distributions with your custodian so it happens without action.
- Take RMDs earlier in the year rather than crowding December deadlines.
- You can take more than the minimum, but excess withdrawals do not carry forward to future years.
Disclaimer: This page includes AI-assisted educational content reviewed for general accuracy. It is not personalized financial, tax, or legal advice. Verify numbers with a qualified professional and our editorial standards.
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