Required Minimum Distribution (RMD)

A Required Minimum Distribution (RMD) is the minimum amount the IRS forces you to withdraw each year from pre-tax retirement accounts — Traditional IRAs, 401(k)s, 403(b)s — once you reach RMD age. The government deferred tax on that money for decades; RMDs are how it finally collects.

The start age depends on your birth year under the SECURE 2.0 Act: if you were born 1951–1959, RMDs begin at age 73; if you were born in 1960 or later, they begin at age 75. (Those born 1950 or earlier already started under the old age-70½ or age-72 rules.) Your first RMD can be delayed until April 1 of the year after you reach RMD age — but then you take two RMDs in that year, which can stack income into a higher bracket.

The math is simple: each year's RMD equals the account balance on December 31 of the prior year, divided by the IRS Uniform Lifetime Table factor for your age. IRAs can be aggregated — compute the RMD for each, then take the total from any one of them. 401(k)s cannot be aggregated; each plan's RMD must come from that plan.

The penalty for missing an RMD is a 25% excise tax on the shortfall (reduced from the old 50%). If you correct the miss within the correction window — broadly, about two years — and file Form 5329, the penalty drops to 10%. The IRS also waives it entirely for reasonable cause; the key is to fix the shortfall fast and document it.

RMDs interact with rollovers in a way that trips people up: an RMD is not an eligible rollover distribution and can never be rolled over. In any year you are RMD-eligible and want to roll a 401(k) or IRA, the RMD must come out first — a rolled-over RMD becomes an excess IRA contribution subject to the 6% excise tax.

Roth accounts are the exception: Roth IRAs have no lifetime RMDs, and starting in 2024, Roth 401(k)s are exempt as well under SECURE 2.0.