Required Minimum Distributions (RMDs): Rules, Calculations, and Strategies

What Are Required Minimum Distributions?

A required minimum distribution is the smallest amount you must withdraw from certain retirement accounts each year once you reach a specific age. The purpose is straightforward: Congress gave you a tax break when you contributed to your traditional IRA or 401(k), and RMDs ensure the government eventually collects tax on that money.

RMDs are 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. The result is the minimum amount you must withdraw. You can always withdraw more than the RMD, but you cannot withdraw less without facing a penalty.

RMDs are treated as ordinary income and taxed at your regular income tax rate in the year they are distributed. For retirees with large traditional IRA or 401(k) balances, RMDs can push income into higher tax brackets, increase Medicare premiums through IRMAA surcharges, and make up to 85 percent of Social Security benefits taxable. This is why proactive planning around RMDs is so important.

Which Accounts Require RMDs?

Not all retirement accounts are subject to RMDs. Understanding which accounts require distributions — and which do not — is the foundation of RMD planning.

Accounts subject to RMDs:

• Traditional IRAs
• 401(k) plans (traditional, not Roth 401(k) — see below)
• 403(b) plans
• 457(b) governmental plans
• SEP IRAs
• SIMPLE IRAs
• Traditional profit-sharing plans
• Inherited Roth IRAs (special rules apply)

Accounts NOT subject to RMDs during the owner's lifetime:

• Roth IRAs — no RMDs while the original owner is alive
• Roth 401(k) accounts — starting in 2024, Roth 401(k)s are no longer subject to RMDs thanks to the SECURE 2.0 Act (previously, Roth 401(k)s did require RMDs unless rolled to a Roth IRA)
• Health Savings Accounts (HSAs) — no RMDs, ever

The Roth IRA exemption from RMDs is one of the most powerful advantages of Roth accounts. Funds in a Roth IRA can grow tax-free for the owner's entire lifetime, making Roth conversions a key RMD reduction strategy covered later in this guide.

SECURE 2.0 Act: New RMD Age Thresholds

The SECURE Act of 2019 and the SECURE 2.0 Act of 2022 significantly changed when RMDs must begin. Prior to 2020, RMDs started at age 70 and a half. The law has since been updated twice:

• Born 1950 or earlier: RMDs began at age 72 (or 70 and a half if born before July 1, 1949)
• Born 1951 to 1959: RMDs begin at age 73
• Born 1960 or later: RMDs begin at age 75

This delay is significant. Someone born in 1965 will not need to take their first RMD until 2040, at age 75 — giving them five additional years of tax-deferred growth compared to the pre-2020 rules. Those extra years also provide a longer window for Roth conversions before RMDs begin.

Your first RMD must be taken by April 1 of the year after you reach the applicable age. All subsequent RMDs must be taken by December 31 of each year. If you delay your first RMD to April 1, be aware that you will have two RMDs in that calendar year (the delayed first-year RMD plus the current-year RMD), which could create a significant income spike.

How to Calculate Your RMD

The RMD calculation has three steps:

1. Determine your account balance as of December 31 of the prior year
2. Find your life expectancy factor from the IRS Uniform Lifetime Table based on your age in the current year
3. Divide the account balance by the life expectancy factor

For example, if you are 75 years old and your traditional IRA balance was $600,000 on December 31 of last year, and the Uniform Lifetime Table factor for age 75 is 24.6, your RMD is $600,000 divided by 24.6 = $24,390.

If your spouse is the sole beneficiary and is more than 10 years younger than you, you may use the Joint Life and Last Survivor Expectancy Table instead, which produces a larger divisor and therefore a smaller RMD. This is the only situation where the Joint Life table applies.

RMD Amounts by Age and Account Balance

The following table shows approximate annual RMD amounts based on selected ages and account balances, using the IRS Uniform Lifetime Table factors:

Notice how RMD percentages increase with age: at 73, you withdraw roughly 3.8 percent of your balance; by 85, it is 6.3 percent; by 90, it is 8.2 percent. For retirees with large balances, these forced withdrawals can generate $50,000 to $150,000 or more in taxable income — often pushing them into higher tax brackets and triggering Medicare IRMAA surcharges.

Penalties for Missing RMDs

Prior to the SECURE 2.0 Act, the penalty for missing an RMD was a brutal 50 percent excise tax on the amount not withdrawn. The SECURE 2.0 Act reduced this penalty, but it remains significant:

• Standard penalty: 25 percent of the shortfall (the difference between what you should have withdrawn and what you actually withdrew)
• Reduced penalty for timely correction: 10 percent if you take the missed distribution and file a corrected tax return within two years

Example: Your RMD for the year is $30,000. You withdrew only $10,000. The shortfall is $20,000. The standard penalty is $5,000 (25 percent of $20,000). If you catch the error, withdraw the remaining $20,000, and file a corrected return within the correction window, the penalty drops to $2,000 (10 percent of $20,000).

The penalty applies regardless of the reason for the miss — even if it was an honest mistake, a health emergency, or a miscalculation. Setting calendar reminders, automating RMD distributions with your custodian, and double-checking calculations each year are essential practices.

Qualified Charitable Distributions (QCDs)

A qualified charitable distribution allows you to transfer up to $105,000 per year (2024 limit, indexed for inflation) directly from your traditional IRA to a qualified charity. The QCD satisfies your RMD for the year but is excluded from your taxable income. This is one of the most powerful tax strategies available to charitable retirees.

To qualify for a QCD, you must be age 70 and a half or older (note: this is earlier than the RMD starting age), the distribution must go directly from your IRA custodian to the charity (you cannot receive the check and then write a donation), and the charity must be a 501(c)(3) organization (donor-advised funds and private foundations do not qualify).

The tax benefit is substantial. If you are in the 22 percent tax bracket and your RMD is $40,000, donating $40,000 via a QCD saves you $8,800 in federal income tax. Unlike a standard charitable deduction (which only benefits those who itemize), a QCD reduces your adjusted gross income (AGI) directly. Lower AGI can reduce Medicare IRMAA surcharges, reduce the taxable portion of Social Security benefits, and lower state income taxes.

If you already donate to charity and have traditional IRA funds, QCDs should be your preferred giving method. You accomplish the same charitable goal while eliminating the tax on your RMD.

Roth Conversion Strategies to Reduce RMDs

Converting traditional IRA or 401(k) funds to a Roth IRA is the most effective long-term strategy for reducing future RMDs. Once funds are in a Roth IRA, they grow tax-free, are withdrawn tax-free in retirement, and are never subject to RMDs during your lifetime.

The trade-off: you pay income tax on the converted amount in the year of conversion. The strategy works best when you convert during years when your income (and therefore your tax rate) is lower than it will be when RMDs begin.

The Roth Conversion Window

The most valuable conversion window is the period between retirement and when RMDs or Social Security begin. If you retire at 62 and delay Social Security until 70, you have eight years of potentially low income — an ideal time to convert traditional IRA funds to Roth. Each dollar converted reduces your future RMDs and the tax they would generate.

The key is to convert enough each year to "fill up" your current tax bracket without pushing into the next one. For example, if you are married filing jointly and your other income puts you at $70,000 in taxable income, you could convert up to approximately $24,000 and stay within the 12 percent bracket (2024 bracket: $23,200 to $94,300 for MFJ). Converting $24,000 costs $2,880 in tax now but eliminates $24,000 from your future RMD base.

The Math: Why Roth Conversions Work

Suppose you have $800,000 in a traditional IRA at age 63. If you do nothing, by age 75 (assuming 6 percent annual growth), the balance grows to approximately $1,600,000. Your first RMD at age 75 would be about $65,000 — all taxable.

If instead you convert $80,000 per year from ages 63 to 72 (ten years), you pay tax on $800,000 in conversions over a decade at potentially lower rates. Your traditional IRA balance at 75 is much smaller (perhaps $400,000 after conversions and growth), producing an RMD of only $16,260. The $800,000 now in your Roth IRA continues growing tax-free with no RMDs ever. Over a 20-year retirement, the tax savings can exceed $100,000.

RMD Aggregation Rules

If you own multiple retirement accounts, the aggregation rules determine how you must take RMDs:

• Traditional IRAs: You must calculate the RMD for each IRA separately, but you can withdraw the total amount from any one IRA or combination of IRAs. This flexibility allows you to strategically draw from the account that best serves your tax or investment goals.
• 401(k) plans: Each 401(k) must satisfy its own RMD independently. You cannot take the RMD from one 401(k) to satisfy the requirement for another. If you have two old 401(k) plans, each must distribute its own RMD.
• 403(b) plans: Like IRAs, 403(b) RMDs can be aggregated. Calculate the RMD for each 403(b) separately, then withdraw the total from any one or combination of 403(b) accounts.

This aggregation flexibility for IRAs is useful for tax-loss harvesting, rebalancing, or consolidating accounts. If you have five traditional IRAs, you can calculate all five RMDs, add them together, and withdraw the total from just one account — simplifying your financial life while meeting the IRS requirement.

Inherited IRA RMD Rules

The SECURE Act of 2019 dramatically changed RMD rules for inherited retirement accounts. The changes primarily affect non-spouse beneficiaries and have created confusion that persists to this day.

Spouse Beneficiaries

Surviving spouses have the most flexibility. Options include treating the inherited IRA as their own (rolling it into their own IRA), which means RMDs follow the surviving spouse's own age and timeline. Alternatively, the spouse can remain as a beneficiary and take distributions based on their life expectancy. Most spouses choose the rollover option for maximum flexibility.

Non-Spouse Beneficiaries: The 10-Year Rule

For most non-spouse beneficiaries who inherited an IRA after December 31, 2019, the entire account must be distributed within 10 years of the original owner's death. There is no option to stretch distributions over the beneficiary's lifetime (the former "stretch IRA" strategy). The IRS has clarified that if the original owner had already begun RMDs, the beneficiary must take annual distributions within the 10-year window — not just empty the account by year 10.

Exceptions to the 10-year rule include minor children of the deceased (but the 10-year clock starts when they reach the age of majority), beneficiaries who are disabled or chronically ill, beneficiaries who are not more than 10 years younger than the deceased, and certain trusts that qualify as "see-through" trusts.

Inherited Roth IRAs

Inherited Roth IRAs are subject to the same 10-year distribution rule for non-spouse beneficiaries. However, because Roth distributions are tax-free, the beneficiary can let the account grow for nearly the full 10 years and withdraw the entire balance tax-free in year 10 — a valuable strategy for maximizing tax-free growth.

Use our 401(k) calculator to project how your current contributions will grow and how RMDs will affect your retirement income. Our retirement savings calculator can model different withdrawal strategies, and the tax calculator helps you estimate the income tax impact of RMDs and Roth conversions.

Frequently Asked Questions