Required Minimum Distributions (RMDs) Explained

Tax-advantaged retirement accounts let your money grow without being taxed along the way — but that deferral doesn’t last forever. Required Minimum Distributions, or RMDs, are the mechanism that eventually requires you to start withdrawing (and paying tax on) that money.

What is a Required Minimum Distribution?

An RMD is the minimum amount the IRS requires you to withdraw each year from certain retirement accounts, starting at a certain age. The government allows these accounts to grow tax-deferred for decades, but eventually requires withdrawals so that the deferred taxes actually get paid.

Which accounts are affected?

RMDs generally apply to:

• Traditional IRAs
• Traditional 401(k)s and similar employer-sponsored plans
• Other tax-deferred retirement accounts

Roth IRAs are a notable exception — they are not subject to RMDs during the original owner’s lifetime, since Roth contributions were already taxed upfront, and the government has no remaining deferred tax to collect. Roth 401(k) rules have shifted over time to more closely match this Roth IRA treatment, so it’s worth verifying current rules for that specific account type.

When do RMDs start?

The age at which RMDs must begin has changed over time due to legislative updates, generally trending later (from age 70½ historically, to 72, and later still in more recent changes). Because this age has been a moving target through recent law changes, it’s essential to verify the current required age directly rather than relying on older information — including information in this very article that may become outdated over time.

How is the RMD amount calculated?

Your RMD is generally calculated by dividing your retirement account balance (as of the end of the previous year) by a life expectancy factor published by the IRS, based on your age. As you get older, this factor decreases, which generally increases the required percentage withdrawal each year.

The exact calculation involves IRS life expectancy tables, and many brokerages and plan administrators calculate this figure for you automatically, showing you the required amount each year rather than expecting you to compute it yourself.

What happens if you don’t take your RMD?

Missing an RMD, or withdrawing less than required, can result in a penalty — historically a significant excise tax on the shortfall amount, though penalty structures have been adjusted somewhat in recent legislative changes. This is a meaningful enough consequence that it’s worth setting up reminders or automatic withdrawals once you’re subject to RMDs, rather than risking an oversight.

Can you take more than the required minimum?

Yes — an RMD is a minimum, not a maximum. You’re free to withdraw more than the required amount in any given year if you need or want to; the RMD rules simply establish the smallest amount you’re required to take.

Do RMDs apply while you’re still working?

For an employer-sponsored plan like a 401(k) (as opposed to an IRA), there’s sometimes an exception that delays RMDs from that specific employer’s plan if you’re still actively working there past the usual RMD age and don’t own a significant stake in the company — though this exception typically doesn’t apply to IRAs, and specific eligibility rules apply. This is a detail worth confirming with your plan administrator if it might apply to your situation.

A strategy some people use: Qualified Charitable Distributions

For those who are charitably inclined, some retirement account holders subject to RMDs can direct a portion of their distribution straight to a qualified charity (a “Qualified Charitable Distribution,” or QCD), which can count toward satisfying the RMD while potentially offering more favorable tax treatment than taking the distribution personally and then donating afterward. This is a fairly specific strategy worth discussing with a tax professional if relevant to your circumstances, since eligibility rules and limits apply.

Why RMDs matter for retirement planning

Understanding RMDs matters even before you’re close to the age they apply, because they affect longer-term planning decisions — for example, some people use Roth conversions earlier in retirement (converting Traditional retirement funds to a Roth, paying tax at conversion) partly to reduce the size of future RMDs and the tax bill they’ll eventually trigger.

Key takeaways

• RMDs are mandatory annual withdrawals from certain tax-deferred retirement accounts, starting at an age set by current law.
• Roth IRAs are exempt from RMDs during the original owner’s lifetime; Traditional IRAs and 401(k)s generally are not.
• The required amount is based on your account balance and an IRS life expectancy factor, and often calculated for you by your plan or brokerage.
• Missing an RMD can trigger a significant penalty, so it’s important to stay on top of the current rules as you approach the relevant age.

This article is for educational purposes only and isn’t personalized tax or financial advice — RMD ages, calculations, and penalties are governed by current law, which changes over time, so verify up-to-date details with a tax professional or the IRS directly. See our full disclaimer.