RMD Rules Explained: Required Minimum Distributions
Required Minimum Distributions (RMDs) force you to start withdrawing from traditional 401(k)s and IRAs at a specific age — currently 73 under SECURE 2.0, rising to 75 in 2033. Miss the deadline and the IRS imposes a 25% penalty on the shortfall. Here is how RMDs work and the strategies to minimize the tax bite.
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Step-by-step
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Confirm your RMD start age
Born 1951–1959: RMDs start at age 73. Born 1960 or later: RMDs start at age 75 (effective 2033 under SECURE 2.0). Roth IRAs have no lifetime RMDs for the original owner. Roth 401(k)s had RMDs through 2023, but as of 2024 are RMD-free.
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Calculate your first RMD
RMD = December 31 prior-year balance ÷ IRS Uniform Lifetime Table divisor for your age. At age 73, the divisor is 26.5 — meaning roughly 3.77% of your balance. Example: $800K traditional IRA balance on Dec 31 → first RMD = $30,189.
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Take it by the right deadline
First RMD can be delayed until April 1 of the year after you turn 73. Every subsequent year, deadline is December 31. Tax pro tip: do not delay the first RMD into the second year — you would owe two years of RMDs in one tax year, often pushing into a higher bracket.
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Aggregate IRAs but not 401(k)s
If you have multiple traditional IRAs, you can take the total RMD from any single account. But each 401(k) requires its own separate RMD. This is a common error — consolidating 401(k)s into an IRA before RMD age simplifies management.
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Use Qualified Charitable Distributions (QCDs) if you donate
After 70.5, you can transfer up to $108,000/year (2026) directly from an IRA to a qualifying charity. The transfer counts toward your RMD but is excluded from your taxable income — much better tax-wise than taking the RMD as income and then deducting the donation.
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Convert to Roth in low-income years before RMDs start
Best window: ages 60–72 (between retirement and RMD start). Move money from traditional → Roth in years when your taxable income is low (after working stops, before Social Security and RMDs kick in). Each dollar converted reduces future RMDs forever.
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Plan for the tax-bracket cliff
RMDs added to Social Security can push retirees from 12% bracket to 22% or 24%. Once in the 22%+ bracket, every $100 of additional income hits at least $22 of tax. Smart Roth conversions in your 60s typically save $40K–$200K+ over a 25-year retirement.
💡 Tips
- Set up automatic year-end RMDs through your custodian. The 25% penalty for missing an RMD (10% if corrected within 2 years) is brutal and easily avoided with autopay.
- Inherited IRAs have entirely different rules under SECURE Act 1.0/2.0 — most non-spouse beneficiaries must drain the account within 10 years. Planning the timing of those withdrawals across the 10 years is a meaningful tax optimization for heirs.
- If your spouse is more than 10 years younger than you, use the IRS Joint Life Expectancy Table instead of the Uniform Lifetime Table — your RMDs are smaller. Custodians sometimes apply the wrong table by default.
FAQ
What is the penalty for missing an RMD?
Under SECURE 2.0, the penalty is 25% of the missed amount (down from 50% pre-2023). If corrected within 2 years and the IRS is notified via Form 5329 with reasonable cause, the penalty drops to 10%. Always file Form 5329 if you missed an RMD, even if requesting a waiver.
Can I take more than the RMD?
Yes, you can take any amount above the RMD — there is no maximum. Excess withdrawals are still taxed as ordinary income but do not count toward future-year RMDs. The opposite is not allowed: you cannot "save up" by skipping an RMD.
Do Roth IRAs have RMDs?
No — Roth IRAs have no lifetime RMDs for the original owner. Roth 401(k)s previously had RMDs but were exempted starting in 2024 under SECURE 2.0. After death, beneficiaries of Roth accounts are subject to distribution rules (usually the 10-year rule).
Can I roll my RMD over to another IRA?
No. RMDs are not eligible for rollover — they must be taken as a distribution. Any amount above the RMD can be rolled over to another IRA or Roth IRA (subject to the once-per-year rollover rule).
How can I reduce my RMDs?
Three main strategies: (1) Roth conversions in your 60s before RMDs start, (2) Qualified Charitable Distributions if you donate to charity, (3) keeping money in Roth accounts where possible. Working past 73 lets you delay your current employer's 401(k) RMD until you actually retire (does not apply to other IRAs).