What is a required minimum distribution (RMD)?

A required minimum distribution (RMD) is the minimum dollar amount the IRS requires you to withdraw annually from tax-deferred retirement accounts — including traditional IRAs, 401(k)s, 403(b)s, and most other employer-sponsored plans — once you reach a certain age. Because contributions to these accounts were made with pre-tax dollars (or grew tax-deferred), the IRS uses RMDs to ensure the money is eventually taxed as ordinary income.

When do RMDs begin?

Under the SECURE 2.0 Act (enacted December 2022), the RMD starting age was raised to 73 for anyone who turned 72 after December 31, 2022. Your first RMD must be taken by April 1 of the year after you turn 73. All subsequent RMDs must be taken by December 31 of each calendar year. If you delay your first RMD to April 1, you'll have two RMDs in that year — which could push you into a higher tax bracket. Roth IRAs are exempt from RMDs during the owner's lifetime; Roth 401(k)s were also exempted starting in 2024 under SECURE 2.0.

How is the RMD amount calculated?

Each year's RMD equals your account balance as of December 31 of the prior year, divided by a life expectancy factor from IRS Publication 590-B (specifically the Uniform Lifetime Table). As you age, the factor decreases, meaning a larger percentage of your balance must come out each year. Most brokerage firms and plan administrators will calculate and notify you of your RMD amount — but the responsibility to take the distribution on time is yours.

• RMDs apply to traditional IRAs, 401(k)s, 403(b)s, and most other tax-deferred accounts.
• Roth IRAs are NOT subject to RMDs during the owner's lifetime (as of 2024, Roth 401(k)s are also exempt).
• First RMD deadline: April 1 of the year after you turn 73. All subsequent RMDs: December 31.
• Missing or underpaying your RMD triggers a 25% excise tax on the shortfall (reduced from 50% by SECURE 2.0).
• You can withdraw more than the RMD in any year — the RMD is a floor, not a ceiling.

Penalty for missing an RMD

The penalty for not taking your full RMD is steep: a 25% excise tax on the amount you should have withdrawn but didn't. SECURE 2.0 reduced this from the prior 50% rate. The penalty can be reduced to 10% if you correct the shortfall within two years. Consult a tax professional if you've missed an RMD — the IRS has a correction process, and the penalty can sometimes be waived for reasonable cause.