The Short Answer
A required minimum distribution, or RMD, is the minimum amount you’re required to withdraw each year from most tax-deferred retirement accounts once you reach a certain age. The government let you save in these accounts tax-deferred for decades, so eventually it requires you to start taking the money out — and paying the income tax that was postponed.
RMDs apply to traditional IRAs, 401(k)s, 403(b)s, 457 plans, and similar tax-deferred accounts. Roth IRAs are notably exempt from RMDs during the original owner’s lifetime.
Why RMDs Exist
Tax-deferred accounts offer a deal: you skip taxes on contributions and growth now, in exchange for paying taxes when you withdraw later. RMDs are how the IRS ensures that “later” actually arrives. Without them, someone could leave money growing untaxed indefinitely and never pay the deferred tax. The required-distribution rules put a deadline on that deferral.
When RMDs Begin
You must start taking RMDs once you reach the age set by current law, which is in the 70s and has been adjusted upward by recent legislation. Your very first RMD can sometimes be delayed slightly into the following year, but after that, an RMD is due by the end of each calendar year. Because the starting age has changed in recent years, it’s important to confirm the current age that applies to you.
How an RMD Is Calculated
Your RMD for the year is based on two things: your account balance at the end of the previous year, and a life-expectancy factor from an IRS table. The basic formula is:
RMD = prior year-end account balance ÷ IRS life-expectancy factor
Example: Suppose your traditional IRA was worth $500,000 at the end of last year, and the IRS table gives you a life-expectancy factor of about 25. Your RMD would be $500,000 ÷ 25 = $20,000 for the year. You must withdraw at least that $20,000, and you’ll owe ordinary income tax on it. You can always withdraw more than the minimum — the RMD is a floor, not a cap.
The Penalty for Missing an RMD
Missing an RMD is costly. Historically the penalty was steep — a large percentage of the amount you failed to withdraw — though recent law reduced it, and the penalty can be reduced further if you correct the mistake promptly. Still, the simplest approach is to never miss one. Many retirees set up automatic distributions through their account provider so the right amount is withdrawn on schedule each year.
RMDs From Multiple Accounts
If you have several retirement accounts, the rules differ by account type:
- Multiple IRAs. You calculate the RMD for each, but you can take the total from any one or a combination of your IRAs.
- Multiple 401(k)s. These are generally less flexible — you typically must take each plan’s RMD from that specific plan.
Ways to Manage RMDs
Because RMDs add to your taxable income, retirees often look for ways to soften their impact:
- Roth conversions before RMD age can shift money into a Roth (which has no lifetime RMDs), reducing future required withdrawals.
- Qualified charitable distributions let those who are charitably inclined donate part of an RMD directly to charity, which can satisfy the RMD without adding to taxable income.
- Withdrawing earlier, in lower-income years before RMDs begin, can spread out the tax over time.
These strategies have specific rules, so they’re worth discussing with a tax professional.
The Bottom Line
A required minimum distribution is the amount you must withdraw each year from tax-deferred retirement accounts once you reach the qualifying age, so the IRS can finally collect the deferred tax. The amount is your prior year-end balance divided by an IRS life-expectancy factor, and missing it carries a penalty. Knowing your RMD age, taking the distribution on time, and planning ahead for the added taxable income are key parts of a smooth retirement.
Frequently Asked Questions
At what age do RMDs start?
RMDs begin at the age set by current law, which is in the 70s and has been raised by recent legislation. Because the starting age has changed in recent years, confirm the current age that applies to you with the IRS or a tax professional.
How is an RMD calculated?
You divide your account balance at the end of the prior year by a life-expectancy factor from an IRS table. For example, a $500,000 balance and a factor of 25 produce a $20,000 RMD. You must withdraw at least that amount, and you can always take more.
Do Roth IRAs have RMDs?
Roth IRAs are not subject to RMDs during the original owner’s lifetime, which is one of their advantages. That lets the money keep growing tax-free without forced withdrawals. Inherited Roth accounts, however, can have their own distribution rules.
What happens if I miss an RMD?
Missing an RMD triggers a penalty on the amount you failed to withdraw. Recent law reduced the penalty, and it can be lowered further if you fix the error promptly, but the best approach is to never miss one — many retirees automate their distributions to be safe.
Can I take more than my RMD?
Yes. The RMD is a minimum, not a maximum. You can withdraw more than the required amount in any year, though larger withdrawals mean more taxable income. Taking only the minimum keeps more money growing tax-deferred.
How can I reduce the taxes from RMDs?
Common strategies include Roth conversions before RMD age, qualified charitable distributions for those who give to charity, and withdrawing in lower-income years before RMDs begin. Each has specific rules, so it’s wise to plan with a tax professional.
This article is for educational purposes only and is not investment, tax, or retirement advice. Contribution limits, income thresholds, and tax rules change and depend on your circumstances. Consult a qualified financial or tax professional and check current IRS guidance for your situation.