Required Minimum Distributions — usually called RMDs — are the amounts the IRS forces you to withdraw from traditional retirement accounts each year once you reach a certain age. The government gave you tax breaks when you contributed; RMDs are how those tax breaks finally get paid back as taxable income. Miss them or get the math wrong and the penalty is severe. Here’s how RMDs work, when they start, how to calculate yours, and the strategies that reduce their impact.
Why RMDs exist
Traditional 401(k)s and IRAs let you contribute pre-tax dollars (or deduct contributions) and grow tax-deferred for decades. The government doesn’t want that deferral to last forever — it wants to collect income tax eventually. RMDs are the rule that ensures it does.
Roth IRAs and Roth 401(k)s, by contrast, were funded with after-tax dollars. Roth IRAs have no RMDs during the original owner’s lifetime. Roth 401(k)s also have no RMDs starting in 2024 (the SECURE Act 2.0 eliminated them). Inherited Roth accounts have their own rules, but the original owner can leave them untouched.
When RMDs start
The starting age has changed several times in the last few years:
- Born 1950 or earlier: RMDs already started at age 70½ or 72
- Born 1951–1959: RMDs start at age 73
- Born 1960 or later: RMDs start at age 75
Your first RMD is due by April 1 of the year after the year you reach RMD age. Every subsequent RMD is due by December 31 of that year. So if you turn 73 in 2026, your first RMD is for 2026 and is due by April 1, 2027 — but your second RMD (for 2027) is also due by December 31, 2027. Many people delay the first one and end up with two RMDs in the same tax year, pushing them into a higher bracket.
Which accounts have RMDs
Yes, RMDs apply to:
- Traditional IRAs
- Traditional 401(k), 403(b), 457(b)
- SEP-IRAs and SIMPLE IRAs
- Inherited traditional IRAs (different rules — see below)
- Inherited Roth IRAs (different rules)
No, RMDs don’t apply to:
- Roth IRAs (during original owner’s lifetime)
- Roth 401(k)s starting in 2024
- Taxable brokerage accounts (no RMDs ever)
- Active 401(k)s if you’re still working at the same employer (the “still working” exception — doesn’t apply if you own >5% of the business)
How to calculate your RMD
The math is straightforward:
RMD = Account balance on December 31 of prior year ÷ Life expectancy factor
The IRS publishes the life expectancy factors in its Uniform Lifetime Table, which most account holders use. The factor decreases (and your RMD percentage increases) as you age.
Approximate factors and resulting percentages
- Age 73: factor 26.5 — about 3.77% of balance
- Age 75: factor 24.6 — about 4.07%
- Age 80: factor 20.2 — about 4.95%
- Age 85: factor 16.0 — about 6.25%
- Age 90: factor 12.2 — about 8.20%
These percentages assume you use the standard Uniform Lifetime Table. There’s a different table (the Joint Life and Last Survivor Table) for account holders with a spouse more than 10 years younger as the sole beneficiary — in that case, RMDs are smaller.
Example calculation
Suppose you turn 75 in 2026 and your traditional IRA was worth $400,000 on December 31, 2025. Your 2026 RMD is approximately $400,000 ÷ 24.6 = $16,260. You can take it as a lump sum, in installments, or in any pattern across the year — just so it’s out of the account by December 31.
How RMDs are taxed
RMD withdrawals are taxed as ordinary income at your federal and state tax rates. They’re reported on a 1099-R from your custodian and added to your other income for the year.
Tax consequences to watch for:
- Higher tax bracket. RMDs can push you into a higher marginal rate, especially in your 80s when the percentage gets larger.
- Higher Social Security taxation. Up to 85% of your Social Security can become taxable depending on combined income. Large RMDs can trigger this.
- IRMAA Medicare surcharge. RMDs can push your modified AGI above thresholds that trigger higher Medicare Part B and Part D premiums (the IRMAA surcharge), based on your tax return from 2 years prior.
- Capital gains tax bumps. Large RMD income can push your other income above the 0% capital gains threshold, costing you on otherwise-untaxed brokerage gains.
These “cliff” effects mean RMDs can cost more in total tax burden than the marginal rate suggests.
The penalty for missing an RMD
If you miss or under-withdraw your RMD, the IRS applies a 25% excise tax on the amount you should have taken but didn’t. That penalty was 50% before SECURE Act 2.0; it’s now reduced to 25% — or 10% if you correct the mistake within 2 years and file a corrected Form 5329.
If you discover a missed RMD, fix it quickly:
- Take the missed amount as soon as possible
- File Form 5329 with your tax return
- Request a waiver of the penalty by attaching a letter explaining the reasonable cause — the IRS often grants waivers for honest mistakes
Strategies to reduce RMD impact
Roth conversions before RMD age
In the years between retirement and the start of RMDs, your taxable income is often lower than it’s been in years — especially before Social Security claiming. This is the prime window for Roth conversions: move money from your traditional IRA to a Roth IRA, paying tax now at potentially lower rates, in exchange for no future RMDs and tax-free growth.
Done strategically over several years, conversions can substantially reduce future RMD-driven tax burden, IRMAA exposure, and Social Security taxation. The window is typically narrow — from retirement to the year before RMDs and full Social Security.
Qualified Charitable Distributions (QCDs)
Once you’re 70½ or older, you can give up to $108,000 (2026 limit, indexed) per year directly from your IRA to qualified charities. This is a Qualified Charitable Distribution. Key benefits:
- The distribution counts toward your RMD
- But it’s not included in your taxable income
- Reduces your AGI, which helps with IRMAA, Social Security taxation, and the standard deduction threshold
- Better than itemizing a charitable deduction because most retirees take the standard deduction
If you regularly give to charity and have IRA money, QCDs are usually the most tax-efficient way to do it. Have your custodian send the funds directly to the charity — you can’t take a withdrawal first and then donate it.
Spread first-year RMDs into the same calendar year
Don’t use the option to defer your first RMD to April of the following year unless you have a clear reason. Doubling up two RMDs in one tax year usually pushes you into a higher bracket and triggers worse IRMAA. Take your first RMD by December 31 of the year you turn 73 (or 75) instead.
Coordinate with Social Security claiming
Combining maximum Social Security (claimed at 70) and large RMDs can stack income and increase the share of Social Security that’s taxable. Some retirees claim Social Security earlier — or accept slightly lower benefits — to spread income across more years and keep marginal rates down. The math is individual: run the numbers.
Consolidate accounts before RMDs
If you have multiple traditional IRAs at different custodians, you can take the total RMD from any one of them or any combination — the IRS just looks at the total. But 401(k) RMDs are calculated and withdrawn account-by-account: you can’t aggregate them. Consider rolling 401(k)s to IRAs before RMDs start to simplify.
Inherited account RMDs
If you inherit a traditional IRA or 401(k), RMD rules depend on when the original owner died and your relationship to them. Major rules under SECURE Act / SECURE 2.0:
Surviving spouses
Have several options. They can typically treat the inherited IRA as their own (subject to standard RMD rules at their own age), or remain a beneficiary with different rules. The choice affects access, taxes, and beneficiaries.
Non-spouse beneficiaries (most adult children)
Generally subject to the 10-year rule — the entire inherited account must be distributed within 10 years of the original owner’s death. For accounts inherited from someone who was already taking RMDs, annual distributions are also required during years 1–9 (this rule was clarified in 2024 IRS guidance — before that it was unclear).
Eligible Designated Beneficiaries
Some beneficiaries are exempt from the 10-year rule and can use a longer life-expectancy stretch:
- Surviving spouses
- Disabled or chronically ill beneficiaries
- Beneficiaries less than 10 years younger than the original owner
- Minor children of the account owner (until they reach majority, then the 10-year clock starts)
Inherited Roth accounts also follow the 10-year rule for non-spouse beneficiaries, but distributions remain tax-free. The 10-year rule still applies even though there’s no tax bill, because the IRS wants the tax-deferred growth to end.
Common mistakes
- Missing the deadline. Especially the first one — many people forget that the “April of next year” option still requires another RMD that calendar year.
- Calculating wrong. Using the wrong life expectancy table or wrong age. Custodians usually calculate for you, but verify the number.
- Not coordinating across multiple accounts. Especially if you have IRAs at different custodians and 401(k)s — rules differ.
- Skipping Roth conversions in the gap years. The retirement-to-RMD window is the most valuable conversion opportunity most people will ever have.
- Charitable giving from the wrong account. If you’re 70½+, giving from a brokerage account when you have IRA money is usually less tax-efficient than a QCD.
- Treating RMDs as “the amount to spend.” The RMD is a withdrawal from the IRA — it doesn’t have to be spent. You can take the cash, pay tax on it, and reinvest in a brokerage account if you don’t need it.
How to manage RMDs in practice
- Mark the year you turn 73 (or 75) on your calendar
- Confirm your custodian has accurate beneficiary designations and your address on file
- In your first RMD year, request the custodian calculate the amount and confirm it
- Decide on timing — lump sum, monthly, quarterly, or year-end — and set up the distribution
- If you give to charity, route up to $108,000 of your RMD as Qualified Charitable Distributions
- Plan tax withholding from the distribution (custodians can withhold federal and state taxes)
- Track the prior-year balance and your factor each year going forward
- Re-evaluate Roth conversion strategy each fall during the years before RMDs start
The bottom line
RMDs are how the government collects the tax you deferred for decades. They start at 73 (or 75 if you were born 1960 or later), are based on your prior-year balance and a life expectancy factor, and are taxed as ordinary income.
The penalty for missing them is steep. The strategies for reducing their impact — Roth conversions in the gap years, qualified charitable distributions, careful coordination with Social Security claiming — are best implemented well before age 73. Talking to a tax professional in your 60s about your RMD strategy is one of the highest-leverage retirement planning moves you can make.
Further Reading
- How Much Do You Need to Retire?
- How Social Security Benefits Are Taxed
- How IRMAA Affects Your Medicare Premium
- What Is a 401(k)?
- Sequence of Returns Risk
- Retirement Planning Hub
This article is for general educational purposes only and does not constitute financial or tax advice. RMD rules are complex and have changed several times in recent years. Consult a tax professional or CPA for guidance specific to your situation.