What are Required Minimum Distributions (RMDs)?
Required Minimum Distributions (RMDs) are mandatory annual withdrawals from traditional IRAs, 401(k)s, 403(b)s, and other tax-deferred retirement accounts. The IRS requires these withdrawals to ensure that retirement savings that received tax-deferred treatment are eventually subject to income tax.
The amount you must withdraw each year is calculated by dividing your prior year-end account balance by a life expectancy divisor from the IRS Uniform Lifetime Table (Publication 590-B). The divisor decreases as you age, meaning RMDs become a larger percentage of your balance over time.
When do RMDs start? SECURE Act 2.0 rules
The SECURE Act 2.0 (signed December 2022) raised the RMD starting age in two phases:
- Born 1951–1959: RMDs begin at age 73.
- Born 1960 or later: RMDs begin at age 75.
Your first RMD must be taken by April 1 of the year following the year you reach the applicable age. However, delaying your first RMD to April 1 means you must take two RMDs in the same calendar year (the delayed first-year RMD plus the current-year RMD), which can push you into a higher tax bracket.
The still-working exception
If you are still employed at the company sponsoring your 401(k) and do not own more than 5% of the company, you can delay RMDs from that specific 401(k) until you actually retire. This exception applies only to the current employer's 401(k) — not to traditional IRAs or 401(k)s from previous employers.
How to calculate your RMD
The formula is straightforward:
RMD = Prior year-end balance / IRS life expectancy divisor
For example, if your combined traditional IRA balance was $800,000 on December 31 and you are 73, the divisor from the Uniform Lifetime Table is 26.5. Your RMD is $800,000 / 26.5 = $30,189.
If your sole beneficiary is a spouse who is more than 10 years younger than you, you use the Joint Life and Last Survivor Expectancy Table instead, which provides a larger divisor and a smaller required distribution.
The Roth conversion window
The years between retirement and RMD start age are widely considered the optimal window for Roth conversions. During this period, your income is often lower (no wages, Social Security may not have started, and RMDs haven't begun), which means conversions are taxed at lower marginal rates.
Every dollar you convert to a Roth IRA reduces your future traditional IRA balance, which directly reduces your future RMDs. Roth IRAs have no RMDs during the owner's lifetime, and qualified withdrawals are entirely tax-free.
This calculator shows your Roth conversion window — the number of years remaining before RMDs begin. If you have a multi-year window, use our Roth Conversion Calculator to model the optimal annual conversion amount using the bracket-filling strategy.
RMD penalties
Under the SECURE Act 2.0, the penalty for failing to take a Required Minimum Distribution was reduced from 50% to 25% of the shortfall amount. If you correct the missed RMD within the IRS correction window (generally the end of the second tax year following the year the RMD was due), the penalty drops to 10%.
Even at the reduced rate, a 25% excise tax on a missed $30,000 RMD is $7,500. Set calendar reminders, automate distributions through your custodian, and verify the amount each year.
Qualified Charitable Distributions (QCDs)
If you are age 70½ or older, you can make Qualified Charitable Distributions of up to $111,000 per year (2026 limit, indexed for inflation) directly from your IRA to a qualified charity. QCDs count toward satisfying your RMD but are not included in your taxable income. This can be a powerful strategy for:
- Satisfying your RMD without increasing your taxable income
- Staying under IRMAA thresholds to avoid Medicare surcharges
- Reducing the amount of Social Security benefits that become taxable
- Supporting causes you care about tax-efficiently
Frequently asked questions
What are Required Minimum Distributions (RMDs)?
RMDs are mandatory annual withdrawals from traditional IRAs, 401(k)s, and other pre-tax retirement accounts. The IRS requires these to ensure tax-deferred savings are eventually taxed as ordinary income.
When do RMDs start under the SECURE Act 2.0?
Born 1951–1959: RMDs begin at age 73. Born 1960 or later: RMDs begin at age 75. Your first RMD must be taken by April 1 of the year following the year you reach the applicable age.
How do I calculate my RMD amount?
Divide your prior year-end traditional account balance by the IRS Uniform Lifetime Table divisor for your age. At age 73, the divisor is 26.5. At age 80, it drops to 20.2, making RMDs a larger percentage of your balance.
What is the penalty for missing an RMD?
The SECURE Act 2.0 reduced the penalty from 50% to 25% of the shortfall. If corrected within the IRS correction window, the penalty drops to 10%.
Can Roth conversions reduce my future RMDs?
Yes. Converting traditional IRA funds to Roth reduces the balance subject to RMDs. Roth IRAs have no RMDs during the owner's lifetime. The years between retirement and RMD start age are the optimal window for tax-efficient Roth conversions.