MoneyLifeCalcFor decades, money in a traditional IRA or 401(k) grows without being taxed. Required minimum distributions, or RMDs, are how the tax eventually gets collected. Once you reach a certain age, the IRS requires you to take out at least a set amount each year and include it in your taxable income.
When RMDs start
Under current law, the starting age depends on when you were born:
- Born from 1951 through 1959: RMDs begin at age 73.
- Born in 1960 or later: RMDs begin at age 75.
Which accounts have them
RMDs apply to traditional IRAs, SEP and SIMPLE IRAs, and traditional balances in 401(k), 403(b), and similar workplace plans. Roth IRAs have no RMDs during the original owner's lifetime, and since 2024 the same is true of Roth 401(k) accounts. Accounts you inherit follow different rules.
How the amount is calculated
The formula is short: take the account balance on December 31 of the previous year and divide it by a factor from the IRS Uniform Lifetime Table for the age you reach this year. The factor gets smaller each year, so the share you must withdraw gets larger.
Here is the example from our Required minimum distribution calculator. Someone born in 1952 turns 74 in 2026. The factor for 74 is 25.5. With $500,000 in the account at the end of 2025, the RMD is $500,000 divided by 25.5, which is $19,608. That is 3.92% of the balance.
The required share starts just under 4% in the early years, passes 5% at about age 81, and is over 8% by age 90. If the account earns more than the percentage withdrawn, the balance can keep growing for a number of years even while distributions are being taken.
Deadlines
Each year's RMD is due by December 31. There is one exception: your very first RMD can be delayed until April 1 of the following year. Be careful with that option. Your second RMD is still due by December 31 of that same year, so delaying means two taxable distributions in one calendar year, which can push you into a higher bracket.
The penalty for missing one
If you take less than the required amount, the penalty is 25% of the shortfall. It is reduced to 10% if you take the missed amount and correct the mistake within the time the law allows. The penalty used to be 50%, so the current rule is more forgiving, but it is still expensive.
If you have more than one account
- IRAs: calculate the RMD for each traditional IRA separately, then add them up. You may take the total from any one IRA or any combination.
- 401(k)s: each plan's RMD must be taken from that plan. You cannot satisfy a 401(k) RMD with an IRA withdrawal.
- Married couples: each spouse's RMDs are separate. One spouse cannot take the other's.
If you are still working
If you are still employed and own no more than 5% of the company, you can usually delay RMDs from your current employer's plan until you retire. The exception does not cover IRAs or plans left at former employers.
How RMDs affect your taxes
An RMD is ordinary income. It can lift you into a higher bracket, cause more of your Social Security to be taxed, and raise income-based Medicare premiums. The Income tax estimate calculator lets you add an RMD as other taxable income and see the effect for the year.
Ways to plan ahead
- Qualified charitable distributions. From age 70 and a half, you can send money straight from an IRA to a qualified charity. It counts toward your RMD and is left out of your taxable income. The limit for 2026 is $111,000 per person.
- Roth conversions before RMDs begin. Moving money from a traditional account to a Roth in lower-income years means paying tax then, at a rate you choose, and having smaller RMDs later.
- Withdrawing earlier than required. Some retirees take modest withdrawals in their sixties to use up low tax brackets and reduce the balance that RMDs will later be based on.
- Reinvesting what you do not need. An RMD has to leave the retirement account, but it does not have to be spent. After tax, it can go into a regular brokerage or savings account.
Each of these has trade-offs that depend on your full tax picture, so they are worth reviewing with a CPA or enrolled agent before you act.
A simple yearly routine
- In January, write down each account's December 31 balance.
- Work out the year's RMD for each account, or confirm the figure your account custodian provides.
- Decide whether to take it monthly, quarterly, or all at once, and whether to have tax withheld.
- Confirm before December that the full amount has been taken.
For how RMDs fit into the bigger question of making savings last, see Will my retirement savings last to 100?