What Is a Required Minimum Distribution (RMD)?
In plain English
A required minimum distribution (RMD) is the minimum amount you must withdraw each year from traditional IRAs, 401(k)s, and most other tax-deferred retirement accounts once you reach age 73. RMDs are calculated based on your account balance and IRS life expectancy tables and are taxed as ordinary income.
How Is Your RMD Amount Calculated?
Your RMD is calculated by dividing your prior year-end account balance by the distribution period from the IRS Uniform Lifetime Table based on your age. For example, at age 75, the distribution period is 24.6 years. If your balance was $500,000, your RMD would be approximately $20,325. Each account's RMD is calculated separately, but you can aggregate IRAs.
What Happens If You Miss an RMD?
Failing to take your full RMD triggers a 25% excise tax on the amount not withdrawn (reduced to 10% if corrected within two years). This makes missing RMDs one of the most costly retirement mistakes. Set calendar reminders or enroll in automatic RMD distributions through your brokerage to ensure compliance every year.
Are There Ways to Reduce RMDs?
Roth conversions before age 73 can reduce future RMDs by moving money into Roth accounts, which have no RMD requirements. Qualified charitable distributions (QCDs) allow those 70½ and older to send up to $105,000 per year directly from an IRA to a charity, satisfying RMD requirements without the distribution counting as taxable income.
Frequently asked questions
Do Roth IRAs have required minimum distributions?
No. Roth IRAs are not subject to RMDs during the account owner's lifetime, making them a powerful tool for tax-efficient legacy planning. However, inherited Roth IRAs are subject to RMD rules for non-spouse beneficiaries.
Can I take more than my RMD amount?
Yes, you can always withdraw more than your required minimum. The RMD is just the floor. However, any amount withdrawn is taxable income, so taking more than necessary may push you into a higher tax bracket or trigger other income-based surcharges.
Keep exploring
Related terms
Traditional IRA
A traditional IRA lets you contribute pre-tax dollars that grow tax-deferred, with withdrawals taxed as ordinary income in retirement.
401(k)
A 401(k) is an employer-sponsored retirement savings plan that lets you contribute pre-tax dollars, reducing your taxable income today while your investments grow tax-deferred.
Roth IRA
A Roth IRA is an individual retirement account where you contribute after-tax dollars and your investments grow tax-free, with tax-free withdrawals in retirement.
Retirement Income
Retirement income is the money you receive during retirement from sources such as Social Security, pensions, investment withdrawals, and part-time work.
Retirement Age
Retirement age refers to when you become eligible for Social Security benefits or choose to stop working, with key thresholds at 62, full retirement age (66–67), and 70.