Guide

Required minimum distributions (RMD) explained

You contributed pre-tax dollars to a Traditional IRA or 401(k) for decades, watched compound growth work tax-free inside the account, and planned to withdraw on your own schedule. Then Congress and the IRS insert a rule: past a certain age you must pull money out every year whether you need it or not. That floor is the required minimum distribution (RMD) — a calculated withdrawal from most tax-deferred retirement accounts. Miss it and the penalty used to be brutal (50% of the shortfall); SECURE 2.0 softened that, but RMDs still drive taxable income, Medicare surcharges, and Social Security taxation in ways many retirees underestimate. This guide covers who must take RMDs, how SECURE 2.0 changed the starting age, the Uniform Lifetime Table calculation, aggregation across accounts, Roth and inherited IRA exceptions, qualified charitable distributions (QCDs), and how RMDs interact with retirement account types and tax-efficient asset location.

Why RMDs exist

Tax-deferred accounts — Traditional IRA, SEP IRA, SIMPLE IRA, 401(k), 403(b), 457(b), and most inherited IRAs — let you defer income tax on contributions and growth. Without a withdrawal requirement, wealthy savers could pass large balances to heirs who stretch tax deferral for generations. RMDs force a minimum annual distribution so the IRS collects tax on deferred balances during the original owner's lifetime (or within defined windows for beneficiaries).

RMDs are minimums, not maximums. You can always withdraw more. The amount is ordinary income in the year distributed — it does not receive long-term capital gains treatment even if the account held stocks for decades. That income layer matters when combined with other retirement cash flows and when planning capital gains tax on taxable brokerage sales in the same year.

Which accounts require RMDs

The general rule: if you got a tax deduction (or employer pre-tax contribution) going in, RMDs apply going out.

Subject to RMDs: Traditional IRA, SEP IRA, SIMPLE IRA, rollover IRA, most 401(k)/403(b)/457(b) balances (including Roth 401(k) — see below).
Roth IRA (owner's lifetime): No RMDs while the original owner is alive. Beneficiaries face inherited-account rules.
Roth 401(k): RMDs applied to Roth 401(k) until SECURE 2.0 eliminated them starting 2024 — but rolling Roth 401(k) to Roth IRA before retirement still simplifies beneficiary planning.
Taxable brokerage: No RMDs — you control realization timing.
HSA: No RMDs, though non-qualified withdrawals after 65 are taxed as ordinary income without penalty.

Employer plans may delay RMDs if you are still working for that employer, you do not own 5% or more of the company, and the plan allows the deferral. IRAs never get a "still working" exception — each Traditional IRA requires its own RMD once you reach the starting age.

SECURE 2.0 and the RMD starting age

The starting age moved several times in recent legislation. Under SECURE 2.0 (signed 2022):

Born 1950 or earlier: RMD age remains 72 (or already started under prior rules).
Born 1951–1959: RMDs begin at age 73.
Born 1960 or later: RMDs begin at age 75 (effective 2033 for that cohort).

"Age 73" means the year you turn 73. Your first RMD is for that calendar year. You may delay the first RMD payment until April 1 of the following year — but that creates two RMDs in one tax year (the delayed first plus the current-year second), which can spike marginal tax rates. Most planners take the first RMD by December 31 of the year you turn 73 unless a deliberate tax-bunching strategy says otherwise.

Check IRS Publication 590-B each year for table updates — divisor tables and penalty percentages change with legislation.

How to calculate your RMD

The formula is straightforward:

RMD = prior December 31 account balance ÷ life expectancy divisor

The divisor comes from IRS tables. Most retirees use the Uniform Lifetime Table, which assumes a beneficiary roughly ten years younger. At age 73 the divisor is about 26.5, meaning you withdraw roughly 3.8% of the prior year-end balance. The divisor shrinks each year (life expectancy shortens), so the percentage of balance rises — age 80 might be near 5%, age 90 near 8%.

Example calculation

Suppose your Traditional IRA totaled $800,000 on December 31, 2025 and you turn 73 in 2026. Using the Uniform Lifetime Table divisor for age 73 (approximately 26.5):

RMD ≈ $800,000 ÷ 26.5 ≈ $30,189 for tax year 2026.

Each account calculates separately, then you aggregate withdrawals for IRAs (see below). Recalculate every year — market gains increase next year's RMD even if you took the full minimum this year.

Joint life and inherited tables

If your spouse is more than ten years younger and is your sole primary beneficiary, you may use the Joint Life and Last Survivor Expectancy Table for a smaller RMD. Inherited IRAs use the Single Life Expectancy Table (or the 10-year rule for many non-spouse beneficiaries under SECURE Act rules). Spousal beneficiaries have additional rollover and delay options.

Aggregation rules across multiple accounts

RMD math is per account, but withdrawal flexibility differs by account type:

Traditional IRAs (including SEP and SIMPLE): Calculate RMD for each IRA, then take the total from any one or combination of IRAs. You cannot satisfy an IRA RMD from a 401(k).
401(k) and other employer plans: Each plan's RMD must be taken from that plan. You cannot aggregate 401(k) RMDs across employers or pull an old 401(k) RMD from your IRA.

Practical implication: retirees with three old 401(k)s often roll them into a single IRA to simplify aggregation — but compare plan investment options, fees, and creditor protection before rolling. A direct trustee-to-trustee rollover avoids the one-per-year IRA rollover limit trap.

Inherited IRA RMD rules (SECURE Act era)

When the original account owner dies, beneficiary rules depend on relationship and date of death:

Eligible designated beneficiaries (surviving spouse, minor child of decedent, disabled/chronically ill individual, beneficiary not more than ten years younger) may stretch RMDs over life expectancy in some cases.
Most non-spouse beneficiaries (adult children, many grandchildren) must empty the inherited account within 10 years under the SECURE Act. Whether annual RMDs are required during those ten years depends on whether the original owner died before or after their RMD beginning date — this is a common compliance mistake.
Spouse beneficiaries may treat the IRA as their own (delaying RMDs to their own starting age) or remain a beneficiary with different timing options.

Inherited Roth IRAs also fall under the 10-year rule for most non-spouse beneficiaries, even though the original owner faced no lifetime RMDs. Estate planning that names trusts as beneficiaries triggers extra complexity — coordinate with an estate attorney before assuming stretch rules apply.

Tax planning around RMDs

RMDs are inflexible income. Planning levers that reduce the tax bite:

Roth conversions before RMD age

Converting Traditional IRA dollars to Roth in lower-income years (early retirement before Social Security and RMDs begin) shrinks future RMD bases. You pay tax now at potentially lower marginal rates. The tradeoff: conversion tax hits today, and wash sale rules do not apply to IRA securities, but conversion timing still matters relative to other deductions.

Qualified charitable distributions (QCDs)

After age 70½, you may donate up to $105,000 per year (2024 limit, indexed) directly from an IRA to qualified charities. A QCD counts toward your RMD but excludes the amount from taxable income — often more efficient than taking the RMD, donating cash, and itemizing. QCDs must go straight to the charity; they cannot flow through a donor-advised fund.

Asset location and withdrawal sequencing

Because RMDs force taxable income, keeping high-growth assets in Roth (no RMD during your lifetime) and bonds in Traditional can optimize total tax drag — see asset location for placement rules. Withdraw taxable brokerage assets strategically in years before RMDs begin to manage brackets.

Medicare IRMAA and Social Security taxation

RMD income can push modified adjusted gross income above Medicare Part B and Part D income-related monthly adjustment amount (IRMAA) thresholds, surcharging premiums two years later. It can also cause up to 85% of Social Security benefits to become taxable. Model combined income before blindly deferring all spending to tax-deferred accounts.

Penalties for missing an RMD

SECURE 2.0 reduced the excise tax on missed RMDs from 50% of the amount not withdrawn to 25%, further reduced to 10% if corrected within a two-year window under the new correction procedure. Still painful on a six-figure shortfall. Custodians often calculate RMD estimates but you are responsible for taking the correct amount on time.

If you discover a missed RMD, withdraw promptly, file Form 5329, and request penalty waiver under the updated rules. Document reasonable error and timely correction.

RMD vs annuities and other income products

RMD rules apply to the retirement account wrapper, not to every income product inside it. Holding a deferred annuity inside an IRA still requires account-level RMDs based on total December 31 balance — the annuity contract's payout schedule does not replace IRS math unless structured as a qualifying longevity annuity under narrow exception rules. Compare annuity mechanics separately from RMD compliance; they solve different problems.

Production checklist for retirees

Confirm your RMD starting age from birth year under SECURE 2.0 rules.
Mark December 31 valuation date and annual withdrawal deadline (April 1 only for first-year delay strategy).
Calculate RMD per account; aggregate IRA totals before choosing which IRA to draw from.
Never satisfy a 401(k) RMD from an IRA — take it from each plan separately.
Evaluate QCDs if you donate to charity and are over 70½.
Model Roth conversions in gap years before RMDs and Social Security.
Check inherited IRA 10-year deadlines for beneficiaries — annual RMD requirements vary.
Review Medicare IRMAA and Social Security tax thresholds with projected RMD income.
Keep Form 1099-R and reconcile against your calculation each January.
Revisit beneficiary designations after major life events — spouse vs non-spouse rules differ sharply.

Key takeaways

RMDs force withdrawals from tax-deferred accounts — the IRS limits how long deferral can last.
Starting age is 73 or 75 for most current workers under SECURE 2.0, depending on birth year.
Divide prior year-end balance by IRS life expectancy — the percentage rises with age.
IRAs aggregate; 401(k)s do not — each employer plan stands alone.
Roth IRAs have no owner lifetime RMDs — but beneficiaries face inherited-account rules.
QCDs and Roth conversions are the main levers to manage RMD-driven taxable income.