Required minimum distributions (RMDs)

The tax break on a traditional retirement account is a deferral, not a gift. Money went in untaxed and grew untaxed, and required minimum distributions (RMDs) are how the government finally collects: once you reach the starting age that applies to your birth date, you must withdraw at least a set amount from tax-deferred accounts every year and pay ordinary income tax on it. Age 73 applies to many current retirees; age 75 applies to people born in 1960 or later.

The required amount starts small, a bit under 4 percent of the balance, and climbs with age. The stakes are less about the withdrawals themselves than about the details around them: a missed deadline triggers one of the steeper penalties in the tax code, a delayed first distribution can double your taxable income for a year, and inherited accounts follow separate rules that changed as recently as 2025.

Congress has also moved the goalposts twice in recent memory. The SECURE Act of 2019 raised the starting age from 70 1/2 to 72, and SECURE 2.0 in 2022 introduced ages 73 and 75 based on date of birth ¹⁹. Older articles and even some custodian letters still quote superseded ages, so it pays to check the date on anything you read about them.

Which accounts have RMDs#

RMDs apply to essentially every account funded with pre-tax dollars ¹².

A traditional pension needs no attention here; its required distributions are satisfied automatically by the monthly checks. Note also that RMDs are individual: each spouse's requirement comes from that spouse's own accounts, and one cannot be satisfied from the other's.

Sources for this section: [1] [2] [3]

When they start#

Your first RMD year depends on your birth year ¹³.

The 1959 row is not a typo. SECURE 2.0's wording can assign both ages to people born that year. The Treasury and IRS acknowledged the overlap and left the applicable-age paragraph reserved in the 2024 final regulations rather than choosing one ⁹. People born in 1959 do not reach age 73 until 2032, but they should verify the rule with the IRS or a tax professional as that year approaches instead of relying on a calculator that silently picks an age.

The first year comes with a one-time option: instead of withdrawing by December 31, you may delay the first RMD as late as April 1 of the following year ¹. The catch is that the second RMD is still due by December 31 of that same year, so delaying stacks two taxable distributions into one tax year ². For someone who turns 73 in 2026, that means a first RMD due by April 1, 2027 and a second by December 31, 2027, both taxed as 2027 income. The delay helps mainly for people whose income drops sharply in the following year, for instance because they stop working; for many others it inflates a bracket, adds to the taxable share of Social Security benefits, and can trip Medicare's income-related premium surcharges.

Workplace plans add one more wrinkle. If you are still employed by the company sponsoring your 401(k) and do not own more than 5 percent of it, that plan's RMDs wait until April 1 after the year you retire ². The exception covers only the current employer's plan; IRAs and old 401(k)s at former employers stay on the normal schedule.

Sources for this section: [1] [2] [3] [9]

How an RMD is calculated#

The formula is one division. Take the account balance as of December 31 of the prior year and divide it by the life expectancy factor for your age this year from the IRS Uniform Lifetime Table, published in Publication 590-B ⁴.

A concrete example: you turn 73 in 2026 and your IRA was worth $500,000 on December 31, 2025. The table's factor for a 73-year-old is 26.5, so your 2026 RMD is $500,000 divided by 26.5, or $18,868 ⁴⁵. The factor shrinks each year, so the required percentage rises as you age:

One exception lowers the bill: if your sole beneficiary is a spouse more than 10 years younger than you, you use the Joint Life and Last Survivor table instead, which produces a larger divisor and a smaller required withdrawal ².

If you own several accounts, the rules on combining them differ by account type. IRA owners calculate the RMD for each IRA separately but may withdraw the total from any one or combination of them. RMDs from 401(k)s and most other workplace plans allow no such aggregation; each plan must pay out its own amount ². Custodians typically calculate the figures and will send reminders, but the legal responsibility for taking the right amount is yours.

There is no requirement to spend an RMD, sell investments at a loss, or take cash at all. You can transfer securities in kind to a taxable brokerage account, and many retirees who do not need the money simply reinvest it. How RMDs fit into a broader drawdown plan, and why some retirees deliberately withdraw more than the minimum in their 60s, is covered in retirement withdrawal strategies.

Sources for this section: [2] [4] [5]

Deadlines and the penalty#

After the first year, every RMD is due by December 31. The penalty for falling short is an excise tax of 25 percent of the amount not taken, reduced to 10 percent if you correct the shortfall within a window that generally runs two years ¹. Before SECURE 2.0 the penalty was 50 percent, a figure that still circulates in older articles.

Caution: If you discover a missed or short RMD, withdraw the missing amount immediately and file Form 5329 with your return. The IRS can waive the penalty entirely when the shortfall came from reasonable error and you have taken steps to fix it, but the waiver must be requested; ignoring the miss forfeits both the reduced rate and the waiver ².

December is a poor month to start the process. Custodians get busy, transfers between institutions take time, and a distribution that settles on January 2 counts for the wrong year. Many retirees automate RMDs as monthly or quarterly installments, which also spreads tax withholding across the year; withholding choices and estimated-tax mechanics are covered in taxes in retirement.

Sources for this section: [1] [2]

Giving an RMD to charity#

A qualified charitable distribution (QCD) sends money directly from an IRA custodian to a qualifying charity. The transfer counts toward your RMD for the year but never appears in your adjusted gross income, which makes it more valuable than an ordinary donation for the large majority of retirees who take the standard deduction and deduct nothing for charity ⁶. Keeping the income off the return also helps with the thresholds that key off adjusted gross income, including the taxation of Social Security benefits and Medicare premium surcharges.

The rules in brief: you must be 70 1/2 or older (note, younger than the RMD age), the money must come from an IRA rather than a workplace plan, and the check must go straight from custodian to charity. In 2026 the cap is $111,000 per person, and a married couple can give up to $222,000 if each spouse uses their own IRAs ⁶. Donor-advised funds and private foundations do not qualify. A separate once-per-lifetime election lets you direct up to $55,000 (the 2026 figure) of QCD money into a charitable gift annuity or charitable remainder trust ⁶. Timing matters in one respect: because the first dollars out of an IRA each year count toward the RMD, a QCD offsets your RMD only to the extent the RMD has not already been withdrawn.

Sources for this section: [6]

Inherited accounts and the 10-year rule#

The rules change entirely when the account owner dies, and they changed again recently. For deaths in 2020 or later, the SECURE Act ended the old "stretch IRA" for most heirs: a non-spouse beneficiary must now empty the inherited account by December 31 of the tenth year after the death ⁷. The lifetime stretch survives only for eligible designated beneficiaries: surviving spouses, the owner's minor children (until age 21), disabled or chronically ill individuals, and anyone no more than 10 years younger than the deceased ⁷.

Within the 10-year window, whether annual withdrawals are also required depends on when the owner died. Final IRS regulations issued in 2024 settled the question: if the owner died on or after their own RMD starting date, the beneficiary must take annual RMDs in years one through nine and empty the account in year ten. Those annual amounts were waived from 2021 through 2024 while the rules were in dispute, and enforcement began in 2025 ⁷. If the owner died before RMDs had begun, no annual withdrawals are required, only the final deadline. Inherited Roth IRAs follow the friendlier version: the 10-year clock applies, but because a Roth owner is always treated as dying before the required date, no annual withdrawals are due along the way ⁷.

Surviving spouses have better options than the 10-year rule, most commonly rolling the account into their own IRA and following the ordinary schedule ⁷. For everyone else, the planning question is pacing: an heir in peak earning years who waits until year ten faces one enormous taxable spike, while level withdrawals across the decade often keep more of the money out of top brackets. Beneficiary designations and account titling drive all of this, which is one reason they belong in a periodic estate planning review.

Sources for this section: [7]

Shrinking future RMDs#

RMDs are only a problem when they force out more taxable income than you want. Several legitimate levers reduce future required amounts, each with its own cost.

Spending tax-deferred dollars first in your 60s, or converting them to a Roth in low-bracket years, shrinks the balance the divisors will apply to; the conversion itself is taxable, so this trades a known tax bill now for smaller mandatory income later. QCDs, for the charitably inclined, remove up to six figures a year from the RMD treadmill after 70 1/2 ⁶. A qualified longevity annuity contract (QLAC) moves up to $210,000, the 2026 limit, of IRA or 401(k) money into a deferred annuity whose value is excluded from RMD calculations until payments begin, which can be as late as age 85 ⁸. And continuing to work keeps the current employer's plan exempt for as long as the job lasts ². None of these is automatically worthwhile; they are ways to choose when the deferred tax comes due rather than letting the table choose for you.

Sources for this section: [2] [6] [8]

RetiredWiki. (2026, July 17). Required minimum distributions (RMDs). https://retiredwiki.com/article/required-minimum-distributions