What is a required minimum distribution (RMD)?

Under the SECURE 2.0 Act, the age your RMDs begin depends on your birth year: age 73 applies if you were born between January 1, 1951 and December 31, 1959, and the age rises to 75 for anyone born in 1960 or later. Roth IRAs owned by the original account holder have no lifetime RMDs, though inherited Roth and traditional accounts follow separate rules. For the full distribution rules, see IRS Publication 590-B and the IRS's required minimum distribution FAQs.

Your RMD for the year is calculated by dividing your retirement account balance as of December 31 of the prior year by a life expectancy factor from the IRS Uniform Lifetime Table. At age 73, that factor is 26.5, so an account worth $530,000 at year-end would produce an RMD of roughly $20,000 the following year. As the factor shrinks with age, the required withdrawal grows as a percentage of the account each year.

RMDs must generally be taken by December 31 each year. The exception is your very first RMD, which you may delay until April 1 of the following year, though doing so means taking two distributions, and two tax hits, in that second year.

Missing an RMD, or taking less than required, can trigger a 25% excise tax on the shortfall under the SECURE 2.0 Act, reduced to 10% if the mistake is corrected within a defined correction period, according to the IRS's required minimum distribution FAQs. Because the penalty is steep, many retirees automate their withdrawals or coordinate them with a broader income plan.

For pre-retirees and retirees, the planning conversation often starts well before age 73. Strategies such as Roth conversions in lower-income years or qualified charitable distributions may help reduce the size of future RMDs and their tax impact, and coordinating RMDs with the rest of a retirement income plan could also help manage the effect on tax brackets, the net investment income tax, and Medicare surcharges, though outcomes depend on individual circumstances and current tax law.