Guide to Required Minimum Distributions (RMDs)
You Can't Keep Money in a Traditional Retirement Account Forever
Required Minimum Distributions force you to start withdrawing (and paying tax on) money from Traditional 401(k)s and IRAs once you reach a certain age -- the government eventually wants its deferred tax revenue on money that's grown tax-free for potentially decades, and RMDs are the mechanism that ensures that revenue actually gets collected rather than being deferred indefinitely across a lifetime and beyond.
When RMDs Start
The starting age is 73 for those born 1951-1959, rising to 75 for those born 1960 or later, under current SECURE 2.0 rules -- rules that have changed more than once in recent years, so it's worth confirming your specific starting age against current guidance rather than an outdated figure you may have seen previously, especially if you're getting close to the relevant age range and planning around it.
How RMDs Are Calculated
Your RMD is your account balance as of December 31 of the prior year, divided by an IRS life-expectancy divisor for your age (from the IRS Uniform Lifetime Table) -- a formula that means your required withdrawal amount actually increases as a percentage of your balance each year as you age, since the divisor shrinks over time. Use the RMD Calculator to calculate yours directly rather than looking up the divisor table and doing the division manually.
The Penalty for Missing One
Failing to take your full RMD by the deadline triggers an IRS excise tax on the shortfall -- a real and significant penalty, so RMDs aren't something to overlook once you reach the required age, and simply forgetting isn't treated as a reasonable excuse by the IRS. Setting a recurring reminder well before the annual deadline, or working with a financial advisor who tracks this on your behalf, is a sensible precaution once you're subject to RMDs.
Roth Accounts Are Different
Roth IRAs are generally exempt from RMDs during the original owner's lifetime -- a real advantage worth factoring into your Traditional vs Roth planning, since it means Roth balances can continue growing tax-free indefinitely without a forced annual withdrawal, unlike a Traditional account. See our full comparison guide for the broader tradeoffs between account types beyond just the RMD question.
Planning Withdrawals Before RMDs Force Your Hand
Some retirees find it worthwhile to begin taking voluntary withdrawals from Traditional accounts before RMDs actually require it, spreading taxable income across more years rather than facing a larger, more concentrated tax bill once mandatory distributions begin at the required age. Whether this makes sense depends heavily on your overall tax situation, other income sources, and long-term financial goals -- a genuinely worthwhile conversation to have with a tax or financial professional well before you actually reach RMD age, since some strategies work better started years in advance.
RMDs and Qualified Charitable Distributions
For charitably inclined retirees, a Qualified Charitable Distribution allows a portion of an RMD to be sent directly to a qualifying charity rather than to the account owner, which can satisfy some or all of the RMD requirement while excluding that amount from taxable income entirely -- a genuinely valuable strategy for anyone already planning to give charitably and looking to reduce the tax impact of a mandatory distribution they don't personally need as income. This is a specific, well-established provision worth discussing with a tax advisor if charitable giving is already part of your regular financial picture.
Frequently Asked Questions
Do RMDs apply if I'm still working?
For a 401(k) at your current employer (not an IRA), you may be able to delay RMDs until you actually retire, if your plan allows it and you don't own more than 5% of the company -- check your specific plan's rules, since this exception doesn't apply to IRAs or to 401(k) accounts from previous employers.
Can I withdraw more than my RMD if I want to?
Yes -- the RMD is a required minimum, not a maximum. You're free to withdraw more if you need or want to, though any amount withdrawn is still subject to regular income tax the same way the required portion is.
Do RMDs apply to inherited retirement accounts too?
Yes, generally, though the specific rules for inherited accounts differ from those for the original account owner and have changed significantly in recent years -- this is a genuinely detailed area worth confirming with a tax professional if you've inherited a retirement account, since the rules depend on your relationship to the original owner and other specific factors.
Can I take my RMD from just one account if I have multiple retirement accounts?
For multiple IRAs, the total RMD can generally be calculated in aggregate and withdrawn from any combination of those accounts, but for multiple employer plans like 401(k)s, each account's RMD generally must be satisfied separately from that specific account -- rules differ by account type, so confirm the specific aggregation rule that applies to your combination of accounts.
How is the excise tax penalty for a missed RMD actually calculated?
It's generally assessed as a percentage of the amount that should have been withdrawn but wasn't, and this percentage has been reduced under recent legislation compared to older, harsher rules -- confirm the current specific rate with the IRS's own guidance, since it's a figure that has changed and could change again.
Should I coordinate RMDs across multiple accounts with a financial advisor?
For anyone with several retirement accounts of different types, coordinating the calculation and timing of RMDs is exactly the kind of detail-heavy task a financial advisor or tax professional adds real value on -- the rules for aggregating across account types are specific enough that a mistake here can trigger a real, avoidable penalty.
Does the RMD divisor change every year even if I don't do anything?
Yes -- the IRS life-expectancy divisor decreases as you age each year, meaning your required withdrawal percentage rises annually even if your account balance stays exactly flat, which is worth factoring into long-term retirement income planning rather than assuming a fixed RMD amount year over year.
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