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RMD

Tax

Required Minimum Distribution

The minimum amount the IRS requires you to withdraw annually from tax-deferred retirement accounts (like a 401(k) or Traditional IRA) starting at a set age, to ensure deferred taxes are eventually collected.

Definition

A Required Minimum Distribution (RMD) is the minimum amount the IRS requires account holders to withdraw annually from tax-deferred retirement accounts, starting at a specified age. RMDs exist because contributions to accounts like Traditional IRAs and 401(k)s were made pre-tax — the IRS uses RMDs to ensure that deferred tax revenue is eventually collected as the account owner ages.

Failing to withdraw the full RMD amount by the deadline triggers a substantial excise tax penalty, making RMD compliance an important part of retirement income planning.

Formula

RMD = Account Balance (as of Dec 31 of prior year) / IRS Life Expectancy Factor

The life expectancy factor comes from the IRS Uniform Lifetime Table and decreases as you age, meaning the required percentage withdrawn increases each year.

Worked Example

Your Traditional IRA balance was $500,000 as of December 31 of last year, and you turn 75 this year. The IRS Uniform Lifetime Table factor for age 75 is 24.6.

RMD = $500,000 / 24.6 = $20,325 (approximately)

You must withdraw at least $20,325 from your IRA this year and report it as ordinary income. Use the RMD calculator to compute your exact required withdrawal using the current IRS life expectancy tables.

Key Things to Know

  • RMDs don't apply to Roth IRAs during your lifetime: Unlike Traditional IRAs, Roth IRA owners are not required to take distributions, letting the account grow tax-free indefinitely if not needed.
  • RMDs from 401(k)s are calculated separately: If you have multiple 401(k)s, each plan's RMD must generally be calculated and withdrawn from that specific plan, unlike IRAs where you can aggregate and withdraw the total from any one account.
  • The penalty for missing an RMD is steep: A 25% excise tax applies to the shortfall, though it drops to 10% if corrected within two years — always confirm withdrawals are taken before the December 31 deadline.
  • RMDs increase as you age: Since the life expectancy factor shrinks each year, the required percentage of your balance you must withdraw rises steadily in later retirement years.
  • Still working past RMD age? Some employer 401(k) plans allow you to delay RMDs on that specific plan until you actually retire, if you don't own more than 5% of the company — this exception does not apply to IRAs.

Related Calculators

RMD Calculator →Calculate your IRS Required Minimum Distribution from traditional IRA and 401(k) accounts. Uses the 2022 Uniform Lifetime Table for ages 72 through 120.

Related Terms

401(k)US Employer-Sponsored Retirement Savings PlanRoth IRARoth Individual Retirement Account

Frequently Asked Questions

Under the SECURE 2.0 Act, the RMD starting age is 73 for individuals born between 1951 and 1959, rising to 75 for those born in 1960 or later. Your first RMD must be taken by April 1 of the year after you reach the applicable age, though delaying the first one means taking two RMDs in that following year.
RMDs apply to tax-deferred retirement accounts including Traditional IRAs, SEP IRAs, SIMPLE IRAs, and employer plans like 401(k)s and 403(b)s. Roth IRAs are not subject to RMDs during the original owner's lifetime, which is a key advantage of a Roth IRA over a Traditional IRA.
The IRS imposes an excise tax penalty of 25% of the amount you should have withdrawn but didn't, reduced to 10% if you correct the shortfall within a two-year correction window. This makes timely RMD withdrawals important even if you don't need the income.
Your RMD is calculated by dividing your retirement account balance as of December 31 of the prior year by a life expectancy factor from the IRS Uniform Lifetime Table, which corresponds to your age that year. Use the RMD calculator to look up your factor and compute the exact required withdrawal.
Yes, RMDs from Traditional IRAs and 401(k)s are taxed as ordinary income in the year you withdraw them, since the original contributions were typically made pre-tax. This is distinct from Roth accounts, where qualified withdrawals are tax-free.