What Are Required Minimum Distributions (RMDs)?

A required minimum distribution (RMD) is the least amount the IRS says you must withdraw each year from most tax-deferred retirement accounts once you reach a set age, currently 73 according to the IRS. The amount is your prior year-end balance divided by an IRS life-expectancy factor. Missing it triggers an excise tax.

You have spent decades filling a traditional IRA or 401(k), and now the rules flip: instead of limits on what goes in, there is a minimum that has to come out, whether or not you need the money. Getting the timing wrong is expensive, so it helps to know the mechanics before the first deadline arrives.

Which accounts have required minimum distributions?

RMDs apply to tax-deferred accounts, not to Roth accounts while the owner is alive. The IRS page on required minimum distributions lists the plans covered.

Accounts that have RMDs

Traditional IRAs, SEP IRAs and SIMPLE IRAs
401(k), 403(b) and 457(b) plans
Profit-sharing plans and other defined contribution plans
Roth IRA beneficiaries (people who inherit a Roth IRA)

Accounts that do not

The IRS says you are not required to take withdrawals from a Roth IRA, or from a designated Roth account in a 401(k) or 403(b), while the original owner is alive. That is one reason people compare a traditional IRA with a Roth when planning ahead. A self-directed IRA is still an IRA, so RMDs apply to it too.

When do you have to take your first RMD?

Your first RMD is due by April 1 of the year after you reach the starting age, and every later one is due by December 31. The IRS currently states that starting age as 73. Congress has changed it before, so check IRS.gov for the age that applies to your birth year.

	IRA (including SEP and SIMPLE)	401(k), 403(b), other plan
First RMD due	April 1 after the year you reach the starting age	April 1 after the later of reaching that age or retiring (if the plan allows)
Later RMDs	December 31 each year	December 31 each year

There is a trap in the first year. If you wait until April 1 for the first RMD, you will also owe the second one by December 31 of the same year. The IRS notes you can take the first withdrawal by December 31 of the year you reach the age instead, which keeps the two withdrawals in separate tax years.

How is an RMD calculated?

The RMD for any year is the account balance at the end of the previous calendar year divided by a distribution period from an IRS table. Most owners use the Uniform Lifetime Table. The IRS says a different table applies if your sole beneficiary is a spouse more than ten years younger.

A worked example with made-up numbers: suppose your IRA was worth $500,000 on December 31 and the table factor for your age were 25.0 (an illustrative factor, not the real table value). Your RMD would be $500,000 ÷ 25.0 = $20,000. Look up your actual factor in IRS Publication 590-B, or use the worksheets on the IRS page.

Two details trip people up:

Workplace plan RMDs can follow different rules from IRA RMDs. The IRS publishes a comparison chart, and a plan's own document can require withdrawals to start earlier.
Withdrawals are generally taxable income, except any portion you already paid tax on (your basis) or amounts that can be received tax-free.

What happens if you miss an RMD?

You may owe a 25% excise tax on the amount you failed to take, and the IRS says that drops to 10% if the shortfall is corrected within two years. You report it on Form 5329. Because the penalty is a share of the missed amount, a $20,000 shortfall at 25% would cost $5,000 on top of regular income tax.

What are your options for the money?

Taking an RMD does not mean spending it. You can withdraw more than the minimum, and once the money is out of the tax-deferred account you can hold it in a taxable brokerage account, a bank account or Treasuries. Liquidity matters here: if part of your IRA is in an illiquid holding, you still need cash to meet the withdrawal, which is a good reason to read about liquidity risk before you reach the starting age. This page is educational and not tax advice, so confirm details with a tax professional.

Frequently asked questions

At what age do required minimum distributions start?

The IRS currently says you generally must start withdrawals from IRAs and workplace plans at age 73. The age has changed through legislation, so confirm the rule for your birth year on IRS.gov.

Do Roth IRAs have RMDs?

Not while the original owner is alive, according to the IRS. Beneficiaries who inherit a Roth IRA are subject to the RMD rules.

Can I take more than the required minimum?

Yes. The IRS says you can withdraw more than the minimum but the withdrawal is included in taxable income in the same way (except any part already taxed or received tax-free).

What is the penalty for missing an RMD?

A 25% excise tax on the amount not withdrawn, reduced to 10% if you correct it within two years, based on the IRS guidance.