What Are Required Minimum Distributions?
Required Minimum Distributions (RMDs) are mandatory annual withdrawals from tax-deferred retirement accounts like Traditional IRAs, 401(k)s, and 403(b)s. The IRS requires these withdrawals to ensure retirement savings are eventually taxed.
RMDs are calculated by dividing your prior year-end account balance by a "distribution period" from IRS life expectancy tables.
RMD Starting Age (SECURE Act 2.0)
| Birth Year | RMD Start Age | First RMD Deadline |
|---|---|---|
| 1950 or earlier | 72 | Already required |
| 1951-1959 | 73 | Year you turn 73 |
| 1960 or later | 75 | Year you turn 75 |
First Year Extension
How RMDs Are Calculated
The formula is simple:
RMD = Account Balance ÷ Distribution Period
The distribution period comes from IRS tables based on your age. At 73, the period is about 26.5 years. At 85, it's about 16 years.
| Age | Distribution Period | Approx. Withdrawal % |
|---|---|---|
| 73 | 26.5 | 3.77% |
| 75 | 24.6 | 4.07% |
| 80 | 20.2 | 4.95% |
| 85 | 16.0 | 6.25% |
| 90 | 12.2 | 8.20% |
Which Accounts Require RMDs?
- Traditional IRA
- SEP IRA
- SIMPLE IRA
- 401(k) and 403(b) (unless still working)
- 457(b) governmental plans
- Inherited IRAs (different rules)
Roth IRAs Are Exempt
Penalty for Missing RMDs
25% Penalty
Example: If your RMD is $20,000 and you don't take it, you owe a $5,000 penalty (25% × $20,000), plus you still must take the RMD and pay income tax on it.
RMD Strategies
- Aggregate RMDs: You can take your total RMD from any one or combination of your IRAs
- Qualified Charitable Distribution (QCD): Donate RMD directly to charity, tax-free
- Roth conversions before RMDs: Convert during lower-income years before age 73
- Reinvest in taxable accounts: If you don't need the income
- Withhold taxes: Have taxes withheld directly from RMD for convenience
Qualified Charitable Distributions (QCDs)
If you're 70½ or older, you can donate up to $105,000/year directly from your IRA to qualified charities. Benefits:
- Satisfies your RMD requirement
- Excludes the amount from taxable income (not even reported as income!)
- Works even if you don't itemize deductions
- Keeps income lower for Social Security taxation and Medicare premiums
QCD > Regular Donation
Frequently Asked Questions
Q: Can I take more than my RMD?
A: Yes! The RMD is a minimum. You can withdraw as much as you want (and pay tax on it).
Q: What if I have multiple IRAs?
A: Calculate the RMD for each IRA, but you can take the total from any one or combination of IRAs. 401(k)s must be taken separately from each account.
Q: What if I'm still working at 73?
A: You can delay RMDs from your current employer's 401(k) until retirement (if you don't own 5%+ of the company). IRAs still require RMDs.
Q: Do inherited IRAs have different rules?
A: Yes. Non-spouse beneficiaries must generally empty inherited IRAs within 10 years (SECURE Act). Spouses have more options.
Q: When is the deadline?
A: December 31 each year. First-year RMD can be delayed to April 1 of the following year.
Q: Can I satisfy RMD with a Roth conversion?
A: No. You must take your RMD first, then you can do a Roth conversion with additional funds if desired.
RMD Planning Checklist
- Know your RMD start age (73 or 75)
- Get your Dec 31 account balance each year
- Calculate RMD using IRS tables or this calculator
- Decide source: one account or aggregate
- Consider QCD if you support charities
- Set up automatic withdrawals if available
- Plan for taxes: withhold or make estimated payments
RMD rules are complex and subject to change. This calculator provides estimates based on IRS Uniform Lifetime Table. Inherited IRA rules differ. Consult a tax professional for personalized guidance.