Retirement accounts are designed to help you save for the future, but tax-deferred accounts do not stay untouched forever. At a certain age, federal rules generally require owners to begin taking Required Minimum Distributions (RMDs) from traditional IRAs and many workplace retirement plans.
The rule sounds simple: withdraw a minimum amount each year. In practice, the timing can affect taxable income, cash flow, charitable giving, investment decisions, and the way other parts of a retirement plan fit together. That is why retirees benefit from understanding the rule before the first deadline arrives, not after.
Financial Literacy Advocates focuses on education for people approaching or already in retirement. If you are building the larger picture first, review the organization’s guide to retirement planning and its article on understanding Social Security alongside the RMD information below.
What Are Required Minimum Distributions?
Required Minimum Distributions are minimum annual withdrawals required from certain tax-deferred retirement accounts once the account owner reaches the applicable starting age. The idea is straightforward: tax-deferred savings eventually become taxable retirement distributions rather than remaining deferred indefinitely.
For many people entering RMD status today, the applicable age is 73. Under SECURE 2.0, the statutory RMD age increases to 75 beginning in 2033; in practical terms, people born in 1960 or later generally fall under the age-75 rule. Because retirement laws change, confirm your own start year rather than relying on an old age-70½ or age-72 article.
Which Retirement Accounts Have RMDs?
|
Account type |
Owner lifetime RMD? |
Important planning point |
|
Traditional IRA, SEP IRA, SIMPLE IRA |
Yes |
RMDs generally begin at the applicable statutory age even if you are still working. |
|
Traditional 401(k), 403(b), and similar employer plans |
Generally yes |
Some participants who are still employed may qualify to delay RMDs from the current employer plan, subject to plan and ownership rules. |
|
Roth IRA |
No |
The original owner generally has no lifetime RMD; beneficiary rules apply after death. |
|
Designated Roth 401(k)/403(b) |
No, for 2024 and later owner years |
SECURE 2.0 removed lifetime RMDs for these designated Roth accounts beginning in 2024. |
Inherited retirement accounts follow a different set of distribution rules. Beneficiary type, the original owner’s status, and the date of death can all matter, so inherited-account decisions should not be based on the owner-lifetime table above.
When Is Your First RMD Due?
Your first distribution year is the year you reach your applicable RMD age. The special rule allows the first payment to be taken as late as April 1 of the following calendar year. After that, annual RMDs are generally due by December 31.
That flexibility can create a tax-planning decision. If you postpone the first RMD until the following spring, you may still owe the second year’s RMD by December 31 of that same calendar year. That means two taxable retirement distributions can land in one tax year.
Why Delaying the First RMD Is Not Automatically Better
Waiting until the April 1 deadline may keep money invested a little longer, but the tax impact matters more than the calendar alone. Two RMDs in one year may raise taxable income and can affect other income-based calculations. Some retirees prefer taking the first RMD during the initial distribution year to spread taxable income more evenly; others may have reasons to delay. The right choice depends on the full tax picture.
How Is an RMD Calculated?
For most account owners, the annual amount is based on the prior December 31 account balance divided by an IRS life-expectancy factor for the distribution year. A different table can apply when the account owner’s spouse is the sole beneficiary and is more than 10 years younger.
Custodians often provide an RMD estimate, but the account owner remains responsible for taking the correct total amount. This becomes particularly important when a retiree owns several IRAs or multiple employer plans.
What If You Have More Than One Retirement Account?
Aggregation rules are easy to misunderstand. Traditional IRAs can often be calculated separately and then satisfied by taking the combined required amount from one or more eligible IRAs. Employer plans generally have separate rules, so you should not assume an RMD from one 401(k) automatically satisfies the requirement for another plan.
Inventory every account. Include traditional IRAs, SEP/SIMPLE IRAs, 401(k)s, 403(b)s, inherited accounts, and any older plans you have not consolidated.
Confirm which accounts are subject to RMDs. Roth treatment and inherited-account rules can differ substantially.
Verify the prior year-end balance. The calculation generally starts with the December 31 value from the previous year.
Track distributions throughout the year. Monthly withdrawals, pension-like installments, or one-time distributions may already be satisfying part of the requirement.
Do not wait until the final week. Processing delays, holidays, or account paperwork can turn a planned distribution into a missed deadline.
RMDs Are Taxable Income in Many Cases
Amounts distributed from pre-tax retirement accounts are generally included in gross income, except to the extent a distribution represents after-tax basis or another nontaxable amount. Because RMDs can change the tax picture, the distribution decision should be coordinated with pensions, Social Security, interest, dividends, capital gains, and other retirement income.
This is one reason a retirement-income plan is more useful than looking at each account separately. Financial Literacy Advocates’ free educational events and workshops are designed to help retirees understand how different benefit and planning rules interact without turning the session into a sales presentation.
Can You Roll Over or Convert an RMD?
No. An amount that is required to be distributed for the year is not eligible for rollover. If you are also considering a Roth conversion during an RMD year, the required distribution generally must come out first before additional eligible dollars are converted.
This distinction is important because a Roth conversion and an RMD may both create taxable income, but they serve different purposes. One is mandatory; the other is elective.
What Happens If You Miss an RMD?
Missing all or part of an RMD can trigger an excise tax on the shortfall. Current law generally sets the excise tax at 25%, with a potential reduction to 10% when a qualifying correction is made within the applicable correction window. The rules for relief and correction are technical, so a missed distribution should be addressed promptly rather than ignored.
7 RMD Planning Questions to Ask Before Year-End
What is my applicable RMD starting age and first distribution year?
Do I want to take my first RMD in that year or use the April 1 grace period?
Which of my accounts are subject to RMDs, and which are not?
Have I already taken withdrawals that count toward this year’s requirement?
How will the distribution interact with Social Security, pensions, capital gains, and other taxable income?
Do I have charitable or legacy goals that should be coordinated with retirement distributions?
Are my beneficiary designations and estate documents still aligned with the account plan?
The final question deserves attention because retirement accounts often transfer by beneficiary designation rather than by the instructions in a will. Financial Literacy Advocates also maintains an educational article on wills and trusts in financial planning for families reviewing the legacy side of the plan.
Make RMDs Part of the Plan, Not a Surprise
RMDs are not simply a December compliance task. They are part of retirement-income planning. Knowing the start age, account rules, deadlines, and tax consequences gives you more time to decide how withdrawals fit with spending needs, taxes, investments, charitable goals, and family priorities.
For additional educational resources, explore the Financial Literacy Advocates retirement resources or contact Financial Literacy Advocates with questions about upcoming workshops and educational programs.
Frequently Asked Questions
At what age do Required Minimum Distributions start?
For many current retirees, RMDs begin at age 73. SECURE 2.0 increases the statutory age to 75 beginning in 2033, so the applicable age depends on your birth year and account type. Older retirees may remain under earlier transition rules.
Do Roth IRAs have Required Minimum Distributions?
Not during the original Roth IRA owner’s lifetime. Beneficiary distribution rules apply after the owner dies. Beginning in 2024, lifetime RMDs are also no longer required from designated Roth accounts in 401(k) and 403(b) plans.
Can I take more than my required minimum distribution?
Yes. An RMD is a minimum, not a maximum. You may withdraw more if your plan or IRA allows it, but extra taxable distributions can affect your tax situation and do not normally reduce the amount of a future year’s RMD. Consider the broader retirement-income plan before taking more solely because it is available.
Educational notice: This article is for financial education only and is not individualized financial, investment, legal, or tax advice. RMD rules can vary by account type, birth year, employment status, beneficiary status, and later changes in law. Confirm current rules with the IRS, your plan administrator, and qualified tax or financial professionals before acting.