Key Takeaways
- RMDs now begin at age 73 (SECURE 2.0 Act), increasing to 75 in 2033
- Calculate RMD by dividing your Dec 31 balance by your IRS life expectancy factor
- Missing an RMD results in a 25% penalty (reduced to 10% if corrected within 2 years)
- Roth IRAs have no RMDs during the owner's lifetime
- First RMD can be delayed until April 1 of the following year (but requires 2 RMDs that year)
What Is a Required Minimum Distribution (RMD)?
A Required Minimum Distribution (RMD) is the minimum amount you must withdraw from your tax-advantaged retirement accounts each year once you reach a certain age. The IRS requires these distributions to ensure that tax-deferred retirement savings eventually get taxed as income.
RMDs apply to Traditional IRAs, 401(k)s, 403(b)s, 457(b)s, SEP IRAs, SIMPLE IRAs, and most other employer-sponsored retirement plans. Notably, Roth IRAs are exempt from RMDs during the account owner's lifetime.
The RMD Calculation Formula
RMD = Account Balance / Life Expectancy Factor
For example, if your IRA balance was $500,000 on December 31, 2024, and you turn 75 in 2025 (life expectancy factor of 24.6), your 2025 RMD would be: $500,000 / 24.6 = $20,325.
IRS Uniform Lifetime Table (2024)
| Age | Factor | Age | Factor | Age | Factor |
|---|---|---|---|---|---|
| 73 | 26.5 | 83 | 17.7 | 93 | 9.6 |
| 74 | 25.5 | 84 | 16.8 | 94 | 9.1 |
| 75 | 24.6 | 85 | 16.0 | 95 | 8.6 |
| 76 | 23.7 | 86 | 15.2 | 96 | 8.1 |
| 77 | 22.9 | 87 | 14.4 | 97 | 7.6 |
| 78 | 22.0 | 88 | 13.7 | 98 | 7.1 |
| 79 | 21.1 | 89 | 12.9 | 99 | 6.7 |
| 80 | 20.2 | 90 | 12.2 | 100 | 6.3 |
| 81 | 19.4 | 91 | 11.5 | 101+ | 5.9 |
| 82 | 18.5 | 92 | 10.8 |
Important RMD Rules to Know
When RMDs Begin
- Born 1951-1959: RMDs begin at age 73
- Born 1960 or later: RMDs begin at age 75 (starting 2033)
- First year exception: Your first RMD can be delayed until April 1 of the following year
First Year Warning
If you delay your first RMD to April 1, you must take two RMDs that year (the delayed first year RMD plus the current year's RMD). This could push you into a higher tax bracket. Most advisors recommend taking your first RMD by December 31 to avoid this double taxation.
RMD Deadline
Each year's RMD must be withdrawn by December 31 (except for the first year, which can be delayed to April 1 of the following year).
Penalty for Missing RMDs
The penalty for failing to take your full RMD is 25% of the shortfall. This is reduced to 10% if you correct the mistake within two years (per SECURE 2.0 Act).
Spouse Sole Beneficiary Rule
If your spouse is your sole beneficiary AND is more than 10 years younger than you, you may use the Joint Life and Last Survivor Expectancy Table instead of the Uniform Lifetime Table. This results in a lower RMD because the joint life expectancy factor is higher.
Pro Tip: Qualified Charitable Distributions (QCDs)
If you're 70 1/2 or older, you can donate up to $105,000 per year (2024 limit) directly from your IRA to charity. This counts toward your RMD but isn't included in taxable income. It's one of the most tax-efficient ways to give to charity while satisfying RMD requirements.
RMD Planning Strategies
- Roth Conversions: Convert traditional IRA funds to Roth before RMDs begin to reduce future RMD amounts
- QCDs: Use Qualified Charitable Distributions to satisfy RMDs while reducing taxable income
- Aggregate RMDs: If you have multiple IRAs, you can take the total RMD from any one or combination of accounts
- In-kind distributions: Take RMDs as stock transfers instead of cash to maintain market exposure
- Tax bracket management: Consider taking more than the minimum RMD in low-income years to reduce future RMDs
Frequently Asked Questions
If you withdraw less than your required RMD, you'll owe a 25% excise tax on the shortfall. However, under SECURE 2.0, if you correct the error within two years, the penalty is reduced to 10%. File Form 5329 with your tax return to report and pay the penalty.
No, Roth IRAs do not have RMDs during the account owner's lifetime. This is one of the key advantages of Roth IRAs. However, inherited Roth IRAs do have distribution requirements for beneficiaries. Starting in 2024, Roth 401(k)s also no longer require RMDs.
Yes, you can reinvest your RMD in a taxable brokerage account after taking the distribution. You cannot put it back into a tax-advantaged retirement account. The RMD will be taxed as ordinary income in the year withdrawn, but future growth in a taxable account receives favorable capital gains treatment.
For IRAs (Traditional, SEP, SIMPLE), you can aggregate all balances and take the total RMD from any one or combination of IRAs. However, for employer plans like 401(k)s, you must calculate and take the RMD separately from each plan. 403(b) accounts can be aggregated with other 403(b)s but not with IRAs.
If you're still employed and don't own more than 5% of the company, you can delay RMDs from your current employer's 401(k) until April 1 of the year after you retire. This "still working" exception does not apply to IRAs or 401(k)s from former employers - those accounts still require RMDs at the standard age.
Inherited IRA rules depend on whether you're an "eligible designated beneficiary" (spouse, minor child, disabled/chronically ill, or within 10 years of age of deceased). Most non-spouse beneficiaries must empty the account within 10 years under the SECURE Act. Spouses have the most flexibility and can treat the IRA as their own.