A required minimum distribution (RMD) is the amount the IRS requires you to withdraw each year from most tax-deferred retirement accounts once you reach the statutory age. It is a tax timing rule—not a bill from your broker for “keeping” the account. Miss it and a penalty can apply; take it and you may owe ordinary income tax on the distribution.
Account orientation: Roth IRA vs 401(k) starter and Investing basics for beginners. Tax filing basics: Filing taxes for beginners. Near-term spending buffer before and during RMDs: Gliding into retirement cash.
Which accounts generally have RMDs
| Account | Typical RMD treatment (high level) |
|---|---|
| Traditional IRA | RMDs required once you reach the applicable age |
| Traditional 401(k) / 403(b) | RMDs required; workplace plans may allow delay while still working at that employer (plan-specific) |
| Roth IRA | No lifetime RMDs for the original owner under current rules |
| Roth 401(k) | Rules have been changing—confirm current IRS/plan treatment for the year you care about |
| Inherited IRAs | Often different, sometimes accelerated schedules: Inherited IRA 10-year rule |
Exact ages and percentages change with legislation (SECURE Act updates and later tweaks). Look up the current IRS RMD age and Uniform Lifetime Table factors for your birth year; this page stays conceptual so it does not publish a factor that ages out.
How the amount is roughly figured
- Take prior year-end account balance (Dec 31).
- Divide by the IRS life-expectancy factor for your age.
- Withdraw at least that amount by the deadline (usually Dec 31; first-year rules can differ).
Custodians such as Fidelity, Vanguard, Schwab, and workplace recordkeepers often calculate a suggested RMD—you remain responsible for taking it across all IRAs correctly (aggregation rules differ for IRAs vs 401(k)s).
Worked example: illustrative math only
Morgan is subject to RMDs. On Dec 31 of last year, Morgan’s traditional IRA at Vanguard was $420,000. For Morgan’s age, the IRS table factor is 25.6 (example factor for illustration—not your factor).
| Step | Number |
|---|---|
| Prior year-end balance | $420,000 |
| ÷ factor 25.6 | $16,406 approximate RMD |
| Tax | Ordinary income on the distribution unless basis applies |
| If Morgan takes $0 | Penalty risk on the shortfall |
Morgan sets a calendar reminder each November, confirms the custodian’s calculated figure, and decides whether to withhold federal tax or pay estimates—mapped inside Budgeting basics so the withdrawal does not scramble monthly cash.
Planning ideas people use (not advice)
- Build taxable-account or Roth layers earlier so future RMDs are smaller relative to needs; age-50+ catch-up contributions can accelerate that while you are still working
- Coordinate charitable giving with qualified charitable distributions (QCDs) when eligible—confirm with a tax professional
- Do not confuse HSA medical withdrawals with IRA RMDs (HSA investing)
- Some people reduce future RMDs with partial Roth conversions in lower-income years—tax bill first, then convert
- Keep an emergency fund so an RMD is not your only cash source in a down market year
Checklist
- List every tax-deferred account and who the custodian is.
- Confirm whether this year is your first RMD year and what deadline applies (Required beginning date for RMDs).
- Use IRS tables / custodian tools for the amount; verify aggregation rules.
- Decide withholding vs quarterly estimates.
- Document withdrawals; keep 1099-R forms for filing season.
- Revisit after Roth conversions, rollovers, or job changes.
- If you claimed Social Security early and still work, do not confuse RMD rules with the SSA earnings test.
Nonqualified annuity payouts use exclusion-ratio math—different from IRA/401(k) RMD taxation: Annuity exclusion ratio basics.
What you can combine across IRAs vs taking each 401(k) RMD separately: RMD aggregation basics.
Inherited Roth IRAs usually skip owner lifetime RMDs but many heirs still face a 10-year empty-by: Inherited Roth IRA basics.
Year-of-death RMD coordination with QCDs: QCDs in the year of death.
Educational only. Not tax, legal, or investment advice. RMD ages, tables, Roth 401(k) rules, and penalties change; confirm with current IRS publications and a qualified tax professional.