If you spend a working life saving in tax-deferred accounts, the IRS eventually wants its cut. A required minimum distribution (RMD) is a deadline: starting the year you turn 73, you must withdraw a minimum amount from accounts like traditional IRAs, 401(k)s, and 403(b)s every year, and missing it costs 25% of what you should have taken.

RMDs exist so that money in tax-advantaged accounts is eventually taxed rather than deferred indefinitely. They apply to traditional IRAs, 401(k)s, and 403(b)s. Roth IRAs have never had lifetime RMDs, and Roth 401(k) accounts have been exempt since 2024, because the tax on those was already paid.

When you have to start

Under SECURE 2.0, your RMD age is 73 if you were born between 1951 and 1959, and 75 if you were born in 1960 or later. Your first RMD is due by April 1 of the year after you reach that age. Every RMD after the first is due by December 31.

Waiting until April 1 for the first one has a cost: you then take two RMDs in the same calendar year, which can push you into a higher tax bracket and raise your Medicare premiums two years later. Most people take the first RMD in the year they turn 73 to avoid the stack.

The practical challenge is knowing how many accounts you have. An inherited IRA or a 401(k) at a long-ago employer still counts, and the penalty applies whether or not you remembered the account. Track them all down before you reach RMD age.

If you miss an RMD, the 25% penalty is on top of the ordinary income tax you owe on the amount. Correct the shortfall within the two-year correction window and file Form 5329, and the penalty drops to 10%; show the IRS it was a reasonable-cause mistake and it may waive the penalty entirely.

Once your accounts are mapped, ask your brokerage to set up automatic RMD payments by bank transfer or check, annually or monthly. Consolidating accounts helps, but you get only one tax-free indirect IRA rollover per 12 months, so use direct transfers.

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Special circumstances

Two situations do not follow the standard schedule.

• Roth accounts: Roth IRAs and, since 2024, Roth 401(k)s are not subject to RMDs during the owner's lifetime. After the owner dies, beneficiaries do have distribution requirements.
• Still working: If you are still employed by the company that sponsors your 401(k) or 403(b) and you do not own more than 5% of it, you can delay RMDs from that plan until you retire. This does not apply to IRAs or to plans from former employers. Confirm the rules with your plan.

How to calculate an RMD

The simplest way to see how RMDs work is to run one. The IRS worksheets use the Uniform Lifetime Table that has been in effect since 2022 and reflects the current age-73 start.

First, take the total balance of your tax-deferred accounts as of December 31 of the prior year. Then find your age on the Uniform Lifetime Table below and its "distribution period," roughly the number of years the IRS expects the account to last. At age 73, the distribution period is 26.5.

Divide the balance by the distribution period. With $200,000 across your tax-deferred accounts at age 73, that is $200,000 divided by 26.5, or $7,547. If your combined federal, state, and local rate on that income is 25%, you would owe about $1,887 in tax on the RMD.

There is no maximum. You can withdraw more than the RMD, or empty the account, any time after 59 1/2 without the early-withdrawal penalty, but every dollar is taxed as ordinary income, so large withdrawals need planning.

RMD distribution periods (ages 73-90)

RMDs on inherited IRAs

Inherited accounts follow different rules:

• A designated beneficiary generally must empty the account within 10 years of the owner's death (the 10-year rule). If the owner had already started their own RMDs, the beneficiary also has to take an annual RMD in years one through nine, not just clear the account by year 10.
• A surviving spouse can instead roll the IRA into their own account, after which RMDs are based on the spouse's age. A spouse younger than 59 1/2 who does this cannot withdraw without the early-withdrawal penalty.
• Eligible designated beneficiaries are a narrower group: the surviving spouse, a minor child of the account owner (only until they reach the age of majority), a chronically ill or disabled person, and anyone not more than 10 years younger than the owner. They can take the account over their own life expectancy instead of the 10-year rule, take a lump sum, or use the 10-year rule.

RMD penalties

Your first RMD gets the April 1 extension; every one after that is a hard December 31 deadline. Turn 73 in 2026 and you can take that RMD by December 31, 2026, or by April 1, 2027, but choosing April means a second RMD is also due by December 31, 2027.

Miss the deadline and the penalty is 25% of the amount you failed to withdraw, on top of the tax you owe on it. On a missed $3,000 RMD, that is a $750 penalty. Correct it within two years and the penalty drops to 10%. If it was a genuine mistake and you document the fix, the IRS can waive it.

Frequently asked questions

What are required minimum distributions (RMDs)?

RMDs are the minimum amounts the IRS requires you to withdraw each year from tax-deferred retirement accounts, such as traditional IRAs, 401(k)s, and 403(b)s, once you reach RMD age. They exist to make sure retirement savings are eventually spent down and taxed rather than deferred forever.

At what age do I need to start taking RMDs?

Your RMD age is 73 if you were born from 1951 to 1959, and 75 if you were born in 1960 or later. The first RMD is due by April 1 of the year after you reach that age; taking it that late means two RMDs in one year, which can raise your tax bracket and your Medicare premiums.

What accounts are subject to RMDs?

RMDs apply to most tax-deferred accounts: traditional IRAs, rollover IRAs, SEP and SIMPLE IRAs, and most 401(k) and 403(b) plans, whether employer-sponsored or self-employed. Roth IRAs and, since 2024, Roth 401(k)s are not subject to RMDs during the owner's lifetime.

What happens if I don't take my RMD on time?

You owe a 25% penalty on the amount you should have withdrawn, plus the regular income tax on it. Correcting the shortfall within two years and filing Form 5329 reduces the penalty to 10%, and the IRS may waive it entirely for a documented, reasonable-cause mistake.

Can I withdraw more than the RMD amount?

Yes, but you cannot apply the extra toward a future year's RMD. Any withdrawal is taxable income, so pulling out more than you need raises your tax bill and can push up your Medicare premiums two years later.

What if I have multiple retirement accounts?

Calculate the RMD for each account separately using its December 31 balance. You can then take the total from a single account or spread it across several. IRAs can be aggregated this way; 401(k)s generally cannot, so an RMD is due from each 401(k). A Certified Financial Planner can help decide which account to draw from first.

How are RMD amounts calculated?

Divide the account balance as of December 31 of the prior year by the distribution period for your age from the IRS Uniform Lifetime Table. Your age and your year-end balance are the only inputs.

What is the 4% rule, and how does it relate to RMDs?

The 4% rule is a spending guideline: withdraw 4% of your total savings in your first retirement year, then adjust that dollar amount for inflation each year after. Your RMDs are part of that total withdrawal, not an addition to it, so in years when the RMD is larger than your planned spending you can reinvest the difference in a taxable account.

How do I reduce the tax on my RMDs?

Two common approaches: keep working past your RMD age so you can defer RMDs from your current employer's plan, and use qualified charitable distributions (QCDs). A QCD sends money straight from your IRA to a qualified charity, up to $111,000 in 2026, and the amount is excluded from your taxable income while still counting toward your RMD.

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