Required Minimum Distributions exist because the government granted you a tax break when you contributed to your Traditional IRA or 401(k) — you deducted those contributions from your taxable income, and the investments grew tax-deferred for decades. Eventually, the IRS wants its share. Under the SECURE 2.0 Act, RMDs must begin by April 1 of the year after you turn 73 (rising to 75 for those born in 1960 or later). The first-year deadline extension to April 1 is a one-time provision — all subsequent RMDs are due by December 31 of each year. If you delay your first RMD to April 1, you'll have to take two RMDs in the same calendar year (the delayed first RMD plus the regular second-year RMD), which could push you into a higher tax bracket. RMDs apply to Traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k)s, 403(b)s, and 457(b) plans. Notably, Roth IRAs are exempt from RMDs during the account owner's lifetime — this is one of the Roth IRA's most valuable features and a key reason for Roth conversion strategies.
Required Minimum Distributions (RMDs): Rules, Calculations & Strategies
Understand RMD rules for IRAs and 401(k)s, how to calculate your required withdrawal, and strategies to minimize the tax impact of mandatory distributions.
Published: March 9, 2026
What Are Required Minimum Distributions?
RMDs are mandatory annual withdrawals from tax-deferred retirement accounts (Traditional IRAs, 401(k)s, 403(b)s) that begin at age 73. The government requires them to eventually collect taxes on money that has grown tax-deferred.
How Do You Calculate Your RMD?
Divide your account balance as of December 31 of the previous year by the IRS life expectancy factor from the Uniform Lifetime Table. For a 75-year-old with $500,000, the factor is 24.6, making the RMD approximately $20,325.
The RMD calculation is straightforward but must be done for each tax-deferred account separately (though IRA RMDs can be aggregated and taken from any one IRA). Take your account balance as of December 31 of the prior year and divide it by the distribution period from the IRS Uniform Lifetime Table corresponding to your age. At age 73, the factor is 26.5, meaning roughly 3.8% of your balance must be withdrawn. At 80, the factor drops to 20.2 (about 5%), and at 90 it's 12.2 (about 8.2%). The percentage increases each year, ensuring accounts are gradually drawn down. If your sole beneficiary is a spouse more than 10 years younger, you use the Joint Life and Last Survivor Expectancy Table instead, which produces a longer distribution period and smaller RMDs. For multiple IRAs, you calculate each account's RMD separately but can withdraw the total from any combination of your IRAs. However, 401(k) RMDs must be taken from each 401(k) individually — you cannot aggregate them. Consider taking RMDs early in the year to allow reinvestment of the after-tax amount, or schedule monthly distributions to dollar-cost average back into a taxable account.
What Happens If You Miss an RMD?
The penalty for missing an RMD was reduced from 50% to 25% under SECURE 2.0, and drops to 10% if corrected within two years. Still, this is one of the steepest penalties in the tax code.
Before the SECURE 2.0 Act, the penalty for failing to take a required minimum distribution was a punishing 50% excise tax on the amount not withdrawn — one of the harshest penalties in the entire tax code. SECURE 2.0 reduced this to 25%, and further reduced it to 10% if the shortfall is corrected within a two-year correction window. Even at 25%, missing a $20,000 RMD would cost you $5,000 in penalties on top of the income tax owed on the distribution. To avoid this, set up automatic RMD distributions with your custodian. Most major brokerages (Fidelity, Vanguard, Schwab) offer automatic RMD calculation and distribution services. If you have multiple IRAs, designate one account as your "RMD account" and set up automatic distributions from it for the total aggregated amount. If you discover you missed a past RMD, take the distribution immediately and file IRS Form 5329 to request a waiver of the penalty. The IRS routinely grants waivers for reasonable cause, especially for first-time errors, if you correct the mistake promptly.
How Can You Reduce the Tax Impact of RMDs?
The most powerful strategy is Roth conversions in low-income years before RMDs begin, which permanently reduces future mandatory distributions. Qualified Charitable Distributions (QCDs) can satisfy RMDs tax-free.
Strategic planning in the years between retirement and age 73 can dramatically reduce the lifetime tax burden of RMDs. The most impactful approach is Roth conversions: converting Traditional IRA funds to a Roth IRA, paying income tax at current rates to eliminate future RMDs on those funds. The ideal window is between retirement and Social Security/RMD commencement, when taxable income is temporarily low. Convert enough each year to "fill up" lower tax brackets without pushing into higher ones. For retirees who are charitably inclined, Qualified Charitable Distributions (QCDs) allow you to donate up to $105,000 per year directly from your IRA to a qualifying charity. The QCD satisfies your RMD obligation but is excluded from taxable income entirely — better than taking the RMD and claiming a charitable deduction, since QCDs reduce adjusted gross income while deductions do not. Other strategies include: using RMD funds to pay estimated taxes (avoiding the need for quarterly payments), taking RMDs in the form of appreciated securities for charitable donations, and coordinating RMD timing with other income sources to minimize bracket creep.
Frequently Asked Questions
No. Roth IRAs are exempt from required minimum distributions during the original owner's lifetime. This is a major advantage of Roth accounts and a key reason to consider Roth conversions before age 73. However, inherited Roth IRAs are subject to distribution rules under the SECURE Act.
You cannot put an RMD back into a tax-deferred account, but you can invest it in a taxable brokerage account. The RMD is taxed as ordinary income regardless, but reinvesting in a taxable account allows continued growth with favorable long-term capital gains rates on future appreciation.
If you're still employed and participating in your current employer's 401(k), you can delay RMDs from that specific plan until you retire (the "still working" exception). This does not apply to IRAs or 401(k)s from former employers — only your current employer's plan, and only if you don't own more than 5% of the company.
RMDs count as income for Medicare IRMAA (Income-Related Monthly Adjustment Amount) surcharges. If RMDs push your modified adjusted gross income above $103,000 (single) or $206,000 (married), you'll pay higher Medicare Part B and Part D premiums — potentially $200-400 extra per month.