Required Minimum Distributions

Required Minimum Distributions (RMDs) are mandatory annual withdrawals that the IRS requires from most tax-deferred retirement accounts once you reach a certain age. Understanding RMD rules is essential for retirement tax planning and avoiding steep penalties.

When RMDs Begin

Under the SECURE 2.0 Act of 2022, the RMD starting age has been pushed back:

| Birth Year | RMD Starting Age |

|-----------|-----------------|

| Before 1951 | 70½ |

| 1951–1959 | 73 |

| 1960 or later | 75 |

Your first RMD must be taken by April 1 of the year following the year you reach your RMD age. All subsequent RMDs must be taken by December 31 of each year. Delaying your first RMD to April 1 means you will have two RMDs in one calendar year, which can push you into a higher tax bracket.

Accounts Subject to RMDs

**RMDs apply to:**

- Traditional IRAs

- SEP IRAs

- SIMPLE IRAs

- 401(k) and 403(b) plans

- 457(b) governmental plans

- Inherited IRAs (with modified rules)

**RMDs do NOT apply to:**

- Roth IRAs (during the owner's lifetime)

- Roth 401(k) accounts (as of 2024, thanks to SECURE 2.0)

- [Health Savings Accounts](HealthSavingsAccounts)

How RMDs Are Calculated

The RMD amount is calculated by dividing your account balance as of December 31 of the prior year by your life expectancy factor from the IRS Uniform Lifetime Table.

**RMD = Prior Year-End Balance ÷ Life Expectancy Factor**

For example, at age 75 the Uniform Lifetime Table factor is 24.6. If your traditional IRA balance was $500,000 on December 31, your RMD would be approximately $20,325.

The Uniform Lifetime Table

Selected factors from the updated table (effective 2022):

| Age | Factor | Age | Factor |

|-----|--------|-----|--------|

| 73 | 26.5 | 80 | 20.2 |

| 74 | 25.5 | 85 | 16.0 |

| 75 | 24.6 | 90 | 12.2 |

| 76 | 23.7 | 95 | 8.9 |

If your sole beneficiary is a spouse more than 10 years younger, you may use the Joint Life and Last Survivor Expectancy Table, which produces a smaller RMD.

Aggregation Rules

- **Traditional IRAs**: You may calculate the RMD for each IRA separately but withdraw the total from any one or combination of your IRAs.

- **401(k) plans**: Each 401(k) must satisfy its own RMD. You cannot take one plan's RMD from another.

- **403(b) plans**: Similar to IRAs, 403(b) RMDs can be aggregated and taken from any 403(b) account.

Penalties for Missing RMDs

Prior to SECURE 2.0, the penalty for failing to take an RMD was a staggering 50% of the shortfall. SECURE 2.0 reduced this to **25%**, and further to **10%** if corrected within two years by filing a corrected return and taking the missed distribution.

Strategies to Manage RMDs

Roth Conversions Before RMD Age

Converting traditional IRA funds to a Roth IRA before RMDs begin reduces the balance subject to future RMDs. This is especially valuable during low-income years such as early retirement before Social Security begins. See [Roth Conversion Strategy](RothConversionStrategy) for detailed guidance.

Qualified Charitable Distributions

If you are 70½ or older, you can direct up to $105,000 per year (2024 limit, indexed for inflation) from your IRA directly to a qualified charity. QCDs:

- Count toward your RMD

- Are excluded from taxable income

- Are available even if you take the standard deduction

Strategic Withdrawal Timing

Consider the tax implications of when you take your RMD within the year. If you expect lower income in a particular year, taking a larger distribution that year and a smaller one the next can smooth your tax liability.

Still-Working Exception

If you are still employed and do not own more than 5% of the company, you can delay RMDs from your current employer's 401(k) until you actually retire. This does not apply to IRAs or former employer plans.

RMDs and Inherited Accounts

The SECURE Act of 2019 dramatically changed inherited account rules. Most non-spouse beneficiaries must now empty inherited accounts within 10 years. Some beneficiaries—surviving spouses, minor children, disabled individuals, and those not more than 10 years younger than the deceased—retain stretch RMD options.

See [Retirement Account Withdrawal Rules](RetirementAccountWithdrawalRules) for a detailed breakdown of inherited account distribution requirements.

Planning Ahead

The key to managing RMDs effectively is planning years before they begin. Building a multi-year tax projection that accounts for Social Security, pension income, investment income, and RMDs allows you to identify optimal years for Roth conversions, charitable giving, and other tax-reduction strategies.

For a comprehensive overview of withdrawal sequencing, see [Retirement Withdrawal Sequencing](RetirementWithdrawalSequencing). For tax planning approaches, see [Tax Planning for Retirement Account Withdrawals](TaxPlanningForRetirementAccountWithdrawals).