What Every Retirement Saver Should Know About Required Minimum Distributions

Uncle Sam hasn’t forgotten about your tax-deferred retirement accounts. When you reach a certain age, the IRS requires you to start taking

Required Minimum Distributions (RMDs)

from traditional IRAs, 401(k)s, 403(b)s, and similar plans. Failing to comply can trigger steep penalties, but smart planning lets you minimize taxes and preserve wealth.

What Are Required Minimum Distributions?

**Required Minimum Distributions (RMDs)** are mandatory annual withdrawals from tax-deferred retirement accounts. The IRS mandates them to ensure taxpayers pay taxes on deferred earnings eventually. These apply to traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k)s, 403(b)s, 457(b)s, and defined contribution plans—but not Roth IRAs during the owner’s lifetime.

RMD rules ensure retirement savings aren’t sheltered from taxes indefinitely. Each plan requires separate satisfaction; distributions from one don’t count toward another. For example, your 403(b) RMD doesn’t offset your 401(k) requirement.

When Do RMDs Begin?

RMDs kick in the year you turn

73

(updated from 72 under SECURE 2.0 Act). Your first RMD is due by

April 1

of the following year, but subsequent ones must be taken by

December 31

annually.

• If you turn 73 in 2026, first RMD by April 1, 2027; 2027 RMD by December 31, 2027.
• Working past 73? You may delay 401(k)/403(b) RMDs from your current employer’s plan until retirement.

Life expectancy tables determine the timeline. Roth IRAs skip lifetime RMDs, allowing tax-free growth.

How Are RMDs Calculated?

Calculate RMD by dividing your

previous year-end account balance

(December 31) by a life expectancy factor from the IRS

Uniform Lifetime Table

(or Joint Life if spouse is sole beneficiary and more than 10 years younger).

Formula: RMD = (Account Balance as of Dec 31 prior year) ÷ Life Expectancy Factor

Here’s a sample IRS Uniform Lifetime Table excerpt:

Age	Factor	Age	Factor
72	27.4	85	16.0
73	26.5	86	15.2
74	25.5	87	14.4
75	24.6	88	13.7
76	23.7	89	12.9
77	22.9	90	12.2
78	22.0	91	11.5
79	21.1	92	10.8
80	20.2	93	10.1
81	19.4	94	9.5
82	18.5	95+	Decreasing

Example: Age 73 with $100,000 balance: $100,000 ÷ 26.5 =

$3,773.58

RMD. For 403(b)s with pre-1987 balances, subtract that amount first.

Providers like Fidelity calculate automatically, often prorating across funds unless specified otherwise.

Which Accounts Are Affected?

• Yes: Traditional IRAs, SEP/SIMPLE IRAs, 401(k)s, 403(b)s, 457(b)s, profit-sharing plans.
• No: Roth IRAs (lifetime), active employer 401(k)/403(b) if still working.

Aggregate IRAs (traditional/SEP/SIMPLE) for total RMD, withdraw from any. Employer plans require separate withdrawals.

Strategies to Manage and Minimize RMD Impact

RMDs trigger taxes, but strategies help:

Qualified Charitable Distributions (QCDs)

Age 70½+, donate up to

$105,000/year

(2024 limit, inflation-adjusted) directly from IRA to charity. Counts as RMD, tax-free.

Roth Conversions

Convert traditional IRA to Roth pre-RMD age. Pay taxes now; no lifetime RMDs, tax-free growth.

Pre-73 Withdrawals

Strategic distributions reduce balances (watch 10% early penalty pre-59½).

Delay via Employment

Work part-time with rollover-eligible plan to postpone RMDs until retirement.

Tax Withholding & EFT

Set electronic transfers, customize withholding via providers.

What Happens If You Miss an RMD?

Penalty:

25%

of undistributed amount (reduced to

10%

if corrected timely). Example: $10,000 missed RMD = $2,500 penalty ($1,000 if fixed). IRS waives for reasonable cause.

Special Rules for Inherited Accounts

Beneficiaries face RMDs based on relationship/age. Update designations; paper forms available.

Planning Tips for Late Starters

Catch-up contributions, low-fee funds, and RMD delays aid late planners.

Frequently Asked Questions (FAQs)

What is the RMD age?

Age 73 for those turning 73 after 2022.

Do Roth IRAs have RMDs?

No, during owner’s lifetime.

How do I calculate RMD?

Prior year-end balance ÷ IRS life expectancy factor.

Can I aggregate RMDs?

Yes for IRAs; no for employer plans.

What’s the penalty for missing RMD?

25% (10% if corrected).

Can I donate RMD to charity?

Yes, via QCD up to $105,000.

This guide equips retirement savers to navigate RMDs confidently, blending IRS rules with practical strategies for tax efficiency.