What is an RMD?
A required minimum distribution is the smallest amount you must withdraw each year from tax-deferred retirement accounts โ traditional IRAs, 401(k)s, 403(b)s and similar plans โ once you reach the trigger age. The government let that money grow untaxed for decades, and RMDs are how it finally collects the tax. Roth IRAs are exempt during the ownerโs lifetime.
When RMDs start: age 73
Under the SECURE 2.0 Act, RMDs begin in the year you turn 73 (the age rises to 75 in 2033). Your first RMD can be delayed until April 1 of the following year โ but doing so means taking two distributions in one year, which can push you into a higher tax bracket. Every RMD after the first is due by December 31.
How the calculation works
Take your account balance as of December 31 of the prior year and divide it by the distribution period for your age from the IRS Uniform Lifetime Table. At age 73 the period is 26.5, so a $500,000 balance gives an RMD of about $18,868. The period shrinks each year, so the required percentage rises as you age. If you have several IRAs, total them and you may take the combined RMD from any one of them; 401(k)s must be calculated and withdrawn separately.
The penalty for missing it
Skipping or under-withdrawing an RMD is expensive: the IRS charges a 25% excise tax on the shortfall (reduced to 10% if you correct it promptly and file Form 5329). That makes the RMD one deadline worth marking on the calendar. To plan the tax on the withdrawal itself, run the figure through our paycheck calculator or project the rest of your nest egg with the retirement calculator.