Key takeaways

• RMDs are mandatory withdrawals from certain tax-deferred retirement accounts beginning at age 73.
• RMDs must be taken by December 31 of each year; missing this deadline can result in penalties.
• Your RMD can be calculated using your account balance and IRS life expectancy tables.

Required minimum distributions (RMDs) are mandatory withdrawals from tax-deferred retirement accounts, such as 401(k)s, traditional IRAs, and 403(b)s, beginning at age 73. RMD rules vary between retirement accounts, and understanding these rules can help you financially prepare for retirement and avoid potential IRS penalties.

What is a required minimum distribution (RMD)?

Required minimum distributions are the minimum amount you must withdraw each year from certain tax-advantaged retirement plans, such as pre-tax 401(k)s, IRAs, and 403(b)s  starting at a certain age — currently age 73.¹ Your RMD is based on your account balance at the end of the previous year and an age-based life expectancy factor provided by the IRS. The penalties for failing to comply with RMD provisions for IRAs and 401(k)s can be steep, so it’s important to understand what distributions are required in your situation.

RMDs can affect your retirement income planning in several ways. First, they can require you to withdraw funds from specific types of accounts, such as 401(k)s, even if you’d prefer to withdraw from your Roth IRA or taxable brokerage account first. RMDs can also force you to withdraw more from your retirement accounts than planned. In this case, you could end up with higher taxable income. Plus, because taxes on Social Security benefits are based on your taxable income, you could end up paying taxes on a larger portion of your Social Security benefits.

RMD rules

Required minimum distributions typically apply to pre-tax retirement accounts, such as traditional IRAs and 401(k)s, beginning the year you turn age 73. As the account owner, you are responsible for making sure that the correct RMD amount is withdrawn by the annual deadline — generally December 31. You can choose to withdraw more than the minimum required amount, though excess distributions will not count toward future RMDs and will count toward your taxable income.

RMDs may apply to the following pre-tax retirement accounts:

• 401(k) plans
• 403(b) plans
• 457(b) plans
• Traditional IRAs
• SEP IRAs
• SIMPLE IRAs
• Profit-sharing plans
• Other defined contribution plans

Required minimum distributions apply to the original account owner and any beneficiaries who may inherit one of these types of accounts. The RMD rules also apply to inherited Roth IRAs, even though they don’t apply to the original account owner.

Since 2024, all Roth accounts — including Roth 401(k) plans — are exempt from RMDs for the owner, but not for beneficiaries who may inherit one.²

Taxes on RMDs

Like all funds withdrawn from qualified retirement accounts, the portion of an RMD made up of pre-tax contributions and gains on those contributions are generally considered taxable income.³ Therefore, taking RMDs typically results in higher reported income on your tax return and, in turn, higher income taxes during the year they are taken.

Each year, you must report any RMDs to the IRS. You will generally receive Forms 1099-R and 5498 each year from the financial institution associated with each account. Then, you will use this information to fill out your tax return.⁴

RMD penalties

If you fail to withdraw the RMD by the applicable deadline or the distribution isn’t large enough, there is a penalty of 25% of the portion you were required to withdraw but didn’t.⁵ Under the SECURE 2.0 Act of 2022, the penalty is reduced to 10% if you correct the error within two years. However, this penalty reduction only applies to late withdrawals in 2023 or later. 

You may also be able to waive the penalty entirely if you establish the shortfall in distributions was due to a reasonable error and that reasonable steps are being taken to remedy the shortfall.⁶ 

How to calculate RMDs

You can estimate your required minimum distributions either manually or using an RMD calculator. To manually calculate the amount of your RMD, you will divide the account balance on December 31 of the prior year by your life expectancy factor. The IRS has published life expectancy tables you can use for this purpose.⁷

There are three different life expectancy tables. Use the one that applies to your situation:

• If you inherited an IRA, use the Single Life Expectancy table (Table I)
• If you’re married, the sole beneficiary of your account is your spouse, and if he or she is more than 10 years younger than you, you use the Joint and Last Survivor table (Table II)
• All other original IRA owners use the Uniform Lifetime table (Table III)

For example, suppose Jane, a 75-year-old woman, is trying to calculate her RMDs for 2026. Jane ended the previous year with a 401(k) balance of $500,000. Based on the appropriate RMD table — the Uniform Lifetime table — Jane’s distribution period is 24.6.

Once Jane has found her distribution period, she should divide her account balance by that number. When she divides her account balance of $500,000 by her distribution period of 24.6, Jane finds that her RMD for 2026 is $20,325.20.

If you work with a financial professional, they will be able to help you calculate your RMD and factor that withdrawal into your overall financial plan.

Special considerations for calculating RMDs

Your marital status and whether you’re the original owner of the retirement account will impact the RMD table you’ll use to calculate your RMDs. Most account holders will use the Uniform Lifetime Table, Table III.⁸ That table applies to:

• Unmarried owners
• Married owners whose spouses aren’t more than 10 years younger
• Married owners whose spouses aren’t the sole beneficiaries of their IRAs

If you don’t fall into one of the categories for Table III, you’ll use one of the other tables.

RMDs for inherited IRAs

If you inherit a traditional IRA and the original owner had started taking RMDs at the time of death, you must continue to take the distributions as previously calculated during the year of the original owner’s death. After this, the amount of your RMD will depend on your status as a beneficiary (e.g., a surviving spouse or minor child). Depending on your relationship to the original owner, you may also be required to fully distribute assets from the account by the 10th year after the owner’s year of death.

Read more: Inherited IRA beneficiary options & withdrawal rules

Starting in 2022, the IRS changed the rules for some inherited IRAs. If you inherited an IRA before January 1, 2022, after the original owner had already started taking required minimum distributions (RMDs), and you're using the Single Life Table, the IRS lets you reset your life expectancy using the updated tables. 

This “reset” will look like this: The beneficiary will “go back” to the year after the owner’s death and find their single life expectancy as of their age in that year using the new table. Then, one year will be deducted from the new life expectancy for each year since the first distribution year to get the divisor for the relevant post-2021 year.

FAQs on required minimum distributions

When do RMDs start?

The RMD requirement is triggered by age. Until December 31, 2022, the age for taking RMDs was 72. However, for retirees who weren’t 72 by that date, the age for taking RMDs is now 73.

Is it better to take my RMD monthly or annually?

For investment purposes, it may be better to take your RMD at the end of the year so your money has more time to potentially grow. However, as many people rely on their RMDs to pay their living expenses throughout the year, monthly withdrawals often make more sense.

What can I do with my RMD if I don’t need it?

If you don’t need your RMD, there are several options available, including some which may have different tax consequences. If you’re okay with paying the tax liability, you can invest the money into a taxable brokerage account. RMD amounts cannot be rolled into a Roth IRA, but amounts withdrawn in excess of the RMD may be eligible for a Roth conversion.