You’ve been saving for retirement for decades. Now the IRS wants its cut — and it has rules about when you must start taking it. Understanding required minimum distributions is one of the most important financial tasks for anyone with a traditional IRA, 401(k), or other tax-deferred retirement account. Miss an RMD, and the penalty can be severe.
Don’t worry — this guide explains RMDs in plain language, covers the key rules, and offers strategies to manage them wisely.
What Is an RMD?
A Required Minimum Distribution is the minimum amount the IRS requires you to withdraw from your tax-deferred retirement accounts each year, starting at a certain age. The purpose: you’ve received a tax break on this money for years. Now the government wants to ensure it gets taxed before you (or your heirs) can simply let it sit tax-deferred forever.
RMDs apply to:
- Traditional IRAs
- SEP-IRAs
- SIMPLE IRAs
- 401(k), 403(b), and 457(b) plans
- Inherited IRAs (different rules — see below)
Roth IRAs owned by the original owner do NOT require RMDs during the owner’s lifetime.
When Must You Start?
The SECURE 2.0 Act changed the starting age. Here’s where things stand in 2026:
| Birth Year | RMD Start Age |
|---|---|
| Before 1951 | Already required (started at 70½ or 72) |
| 1951–1959 | Age 73 |
| 1960 or later | Age 75 |
Your first RMD must be taken by April 1 of the year after you reach your RMD starting age. All subsequent RMDs are due by December 31 each year. Taking two RMDs in one year (first year + second year) can push you into a higher tax bracket — something to plan around.
How Is the RMD Amount Calculated?
Your RMD is calculated by dividing your account balance (as of December 31 of the prior year) by a life expectancy factor from the IRS Uniform Lifetime Table.
Example: If your IRA had $500,000 at year-end and you’re 75 (life expectancy factor: 24.6), your RMD is:
$500,000 ÷ 24.6 = approximately $20,325
The factor decreases each year, so your RMD percentage of your account grows slightly over time. Your IRA custodian (bank or brokerage) will often calculate this for you — but the responsibility for taking it is yours.
What Happens If You Miss an RMD?
The penalty for missing an RMD is steep: 25% of the amount you should have withdrawn. If you catch and correct the mistake quickly (within two years), the penalty drops to 10%. The IRS does have a formal correction process, so if you realize you missed an RMD, don’t panic — correct it promptly.
Smart Strategies for Managing RMDs
Roth Conversions Before RMDs Begin
If you’re 60–72 and in a relatively low tax bracket, converting some traditional IRA funds to a Roth IRA reduces the balance subject to future RMDs. Converted amounts grow tax-free and never require RMDs from the original owner.
Qualified Charitable Distributions (QCDs)
If you’re charitably inclined and over 70½, you can make a Qualified Charitable Distribution — transferring up to $105,000 (2026 limit) per year directly from your IRA to a qualified charity. This satisfies your RMD and keeps the amount out of your taxable income entirely. It’s one of the best tax moves available to retirees.
Keep Investing RMDs You Don’t Need
If you don’t need your RMD for living expenses, you can reinvest it in a taxable brokerage account. You’ll owe income tax on the withdrawal, but the money continues working for you.
Aggregate Multiple IRAs
If you have multiple traditional IRAs, you can calculate the total RMD across all accounts and take the entire amount from just one account if you prefer. This flexibility lets you leave certain accounts untouched for strategic reasons.
Inherited IRAs: Different Rules
The rules for inherited IRAs changed significantly under the SECURE Act. Most non-spouse beneficiaries who inherited after January 1, 2020 must empty the inherited account within 10 years. Spouses have more flexibility — they can treat the inherited IRA as their own, which often allows them to delay RMDs based on their own age.
Frequently Asked Questions
Do I have to take my RMD if I don’t need the money?
Yes. RMDs are mandatory regardless of whether you need the income. The only way to avoid them is to convert the funds to a Roth IRA before RMD age (no RMDs on Roth IRAs).
Can I take more than the RMD minimum?
Absolutely. The RMD is the minimum you must take — you can always withdraw more. However, excess withdrawals from traditional accounts are subject to ordinary income tax.
What if my account drops significantly in value — do I still owe the same RMD?
No. RMDs are calculated on the prior December 31 balance. If your account dropped significantly after that date, you still owe the RMD based on the higher December 31 balance — which is one reason market downturns early in RMD years can be challenging. (Congress has offered temporary RMD waivers during major market downturns, as it did in 2009 and 2020.)
Are RMDs taxed as ordinary income?
Yes. Withdrawals from traditional IRAs and 401(k)s are taxed as ordinary income — the same as wages. This is the tax deferral coming due. Qualified dividends and long-term capital gains within your IRA lose their preferential tax treatment once distributed.
What is a Qualified Charitable Distribution and how do I set one up?
A QCD is a direct transfer from your IRA to a qualified charity. Contact your IRA custodian and request a direct charitable distribution — they’ll send a check directly to the charity on your behalf. The amount doesn’t appear as income on your tax return, unlike a regular withdrawal that you then donate.
Take Control of Your RMD Strategy
RMDs don’t have to be a burden — with the right planning, they can be managed efficiently to minimize your tax bill and support your lifestyle. The key is understanding when they start, how much you’ll owe, and what strategies (Roth conversions, QCDs, rebalancing) can help you manage the tax impact.
Explore more Retirement Planning guides on this site to build a complete tax-efficient withdrawal strategy for your retirement years.
Recommended Reading: The New Retirementality — a highly rated guide to help you make the most of your retirement.
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