Definition
What is a required minimum distribution (RMD)?
A required minimum distribution is the minimum amount you must withdraw each year from most pre-tax retirement accounts once you reach a certain age (currently 73). The withdrawal is taxed as ordinary income, and failing to take it on time can trigger a significant IRS penalty.
RMDs exist because pre-tax accounts like traditional IRAs and 401(k)s were funded with untaxed dollars — the government eventually requires that money to be withdrawn and taxed.
Because RMDs are taxable and grow with your account balance, planning ahead — through Roth conversions, qualified charitable distributions, or a coordinated withdrawal strategy — can reduce their tax impact over a long retirement.
This definition is for educational purposes only and does not constitute investment, tax, or legal advice. Rules and thresholds change; consult a qualified professional about your situation.