Required Minimum Distributions: What Retirees Need to Know
Retirement accounts can have distribution rules that affect when money must be withdrawn and how those withdrawals are reported for tax purposes. Understanding Required Minimum Distributions (RMDs) can help you prepare for deadlines and evaluate how withdrawals fit into your broader retirement-income picture.
Explore the RMD GuideWhat is a Required Minimum Distribution?
A Required Minimum Distribution is generally the minimum amount that must be withdrawn from certain tax-advantaged retirement accounts each year once the applicable RMD rules begin to apply.
These rules are intended to ensure that tax-deferred retirement savings are eventually distributed. The amount is generally calculated using the relevant account balance and an IRS life-expectancy factor, with different rules applying in certain circumstances.
RMDs can affect taxable income, cash-flow decisions, Medicare-related income calculations, and how you coordinate withdrawals with Social Security or other retirement resources. The effects depend on your circumstances.
An RMD is a distribution requirement, not necessarily a recommendation to spend the money. Depending on the account and your circumstances, you may need to withdraw the amount even if you do not need it for current living expenses.
Explore the topics in this guide
How is an RMD calculated?
For many account owners, the annual RMD is generally calculated using the account value at the end of the previous calendar year and a life-expectancy factor from the applicable IRS table.
Identify the balance
Identify the account’s applicable value on December 31 of the prior year.
Find the factor
Use the appropriate IRS life-expectancy table and factor for your circumstances.
Calculate the amount
Divide the relevant balance by the applicable factor, subject to special rules.
Arrange the withdrawal
Check the due date and arrange the distribution with the custodian or plan.
See how the formula works
The following example uses hypothetical figures to demonstrate the basic calculation. It is not an estimate of your RMD and does not represent the factor applicable to any specific person.
A simple example
Assume, for illustration only, a hypothetical distribution factor of 25.
Illustrative calculation: $500,000 ÷ 25 = $20,000.
The $20,000 result is only an arithmetic example. The actual RMD factor depends on the applicable IRS table, age, beneficiary circumstances, and other relevant rules.
When do RMDs have to be taken?
The deadline depends on whether it is your first RMD year, a later year, or a special situation involving an employer plan or an inherited account.
Potentially an extended deadline
For many account owners, the first RMD may be delayed until April 1 of the year after the year they reach the applicable starting age. Delaying the first RMD generally means the next year's RMD is also due by December 31 of that same year, potentially resulting in two taxable distributions in one calendar year.
Generally due by December 31
After the first RMD year, distributions are generally due by December 31 each year. Confirm the applicable rule for your account and plan.
A special rule may apply
Some participants who are still working may be able to delay RMDs from their current employer’s plan until retirement, depending on the plan and other conditions. This exception generally does not apply to IRAs and may not apply to certain owners of the employer.
Your birth year, account type, employment status, beneficiary status, and plan documents can change the applicable requirements. Verify the rule before choosing a distribution date.
Which retirement accounts may be subject to RMDs?
RMD rules differ depending on the type of account and whether you are the original account owner or a beneficiary.
| Account type | General treatment | What to verify |
|---|---|---|
| Traditional IRA | Generally subject to RMDs beginning at the applicable starting age. | Year-end balance, applicable IRS table, and distribution deadline. |
| SEP IRA / SIMPLE IRA | Generally subject to traditional IRA RMD rules. | Account balances and whether multiple IRA distributions may be aggregated. |
| 401(k) and other eligible workplace plans | Generally subject to plan-specific RMD requirements. | Plan terms, employment status, and any applicable still-working exception. |
| Roth IRA owned by the original account holder | Generally not subject to lifetime RMDs for the original owner. | Beneficiary rules apply after the owner’s death. |
| Inherited retirement account | Distribution rules vary based on the original owner, beneficiary, account type, and applicable law. | Beneficiary category, year of death, applicable deadlines, and whether annual distributions are required. |
This table is a general educational overview, not a complete statement of the rules for every retirement arrangement. Certain accounts, beneficiaries, and plan situations have special provisions.
How RMDs can affect your retirement picture
A required withdrawal can affect more than the amount deposited into your bank account. It is useful to consider the distribution alongside other income sources and the rest of your retirement plan.
Taxable income
Traditional retirement-account distributions are generally included in taxable income, except to the extent an exclusion or special tax rule applies. The result depends on the account and your individual tax circumstances.
Social Security
Additional taxable income can affect how much of your Social Security benefits is taxable under federal rules. The result depends on your combined income and other circumstances.
Medicare premiums
Income from an earlier tax year may affect Medicare income-related premium adjustments. The timing and amount of an RMD can therefore be relevant to broader income planning.
Cash-flow needs
You may need the distribution for living expenses, or you may have other resources to cover spending. Consider how the withdrawal fits into your overall cash-flow plan.
Investment allocation
The assets used to fund a distribution can affect the remaining account allocation. Review liquidity, investment risk, and the timing of the withdrawal.
Charitable giving
Eligible IRA owners may be able to make a qualified charitable distribution directly to an eligible charity. Specific requirements apply, so confirm eligibility and reporting with a tax professional.
What if you inherit a retirement account?
Inherited retirement accounts can have different distribution deadlines depending on the beneficiary’s relationship to the original owner, the date of death, the account type, and applicable exceptions.
Beneficiary status matters
Spouses, certain eligible designated beneficiaries, other designated beneficiaries, and non-designated beneficiaries may be subject to different rules. Some beneficiaries are subject to a 10-year distribution rule, and some situations also require annual distributions during that period.
It is important not to assume that every inherited account follows the same schedule.
Information to gather
- Type of retirement account inherited
- Date of the original owner’s death
- Whether the original owner had begun RMDs
- Relationship to the original owner
- Beneficiary classification under applicable rules
- Custodian guidance and applicable plan documents
Inherited-account rules are fact-specific and may be affected by federal law and IRS guidance. Consult a qualified tax professional or plan administrator before deciding on a distribution schedule.
RMD mistakes worth avoiding
Good preparation can help reduce missed deadlines and prevent avoidable confusion.
Assuming every account has the same deadline
Different account types and beneficiary situations can have different rules.
Forgetting to coordinate multiple custodians
Each institution may calculate or communicate distributions separately. Keep a consolidated record of what is required and what has been taken.
Assuming an automatic payment is sufficient
Confirm the amount, timing, and completion of each required distribution instead of assuming an instruction is still active.
Waiting until year-end to review everything
Early review provides more time to verify calculations, resolve account questions, and coordinate the distribution with other cash-flow needs.
Ignoring inherited-account requirements
Beneficiary distribution schedules may differ from the original owner's rules. Confirm the requirements for each inherited account.
Overlooking a missed distribution
A shortfall may trigger an excise tax unless an applicable exception or correction process applies. Contact a qualified tax professional promptly if a distribution was missed.
Your RMD review checklist
Use this list as a starting point for your annual review. It is not a substitute for checking the requirements that apply to your specific accounts.
Review IRS RMD Guidance- List every retirement account you own or have inherited.
- Confirm which accounts are subject to RMD rules.
- Verify the applicable starting age and deadline.
- Obtain the relevant prior year-end account balances.
- Confirm the IRS table and distribution factor that apply.
- Check whether aggregation rules are available for your accounts.
- Confirm the amount and timing with each custodian or plan administrator.
- Review potential tax and cash-flow effects with qualified professionals.
- Keep records of the calculations and distributions completed.
RMD questions, answered
At what age do RMDs generally begin?
For many retirement-account owners, the general starting age is 73 under current rules. The applicable starting age can depend on birth year and other circumstances, so confirm the rules that apply to you.
Can I delay my first RMD?
Many account owners can delay the first RMD until April 1 of the year following the year they reach the applicable starting age. This can mean two RMDs are due in the following calendar year. Certain workplace plans may have a separate still-working exception.
Do I have to spend the money I withdraw?
No. An RMD is a distribution requirement, not a requirement to spend the proceeds. What you do with a distribution depends on your circumstances, the account rules, and any applicable tax considerations.
Can I combine RMDs from multiple accounts?
Sometimes. Certain IRA RMDs may be aggregated, but the same treatment generally does not apply to every type of retirement plan or account. Verify the rules before taking a distribution from one account to satisfy another account’s requirement.
What happens if I miss an RMD?
An insufficient distribution may be subject to an excise tax on the shortfall. Under current federal rules, the tax is generally 25%, with a possible reduction to 10% if the shortfall is corrected within the applicable correction window. Relief may be available in certain circumstances. Confirm current requirements with the IRS or a qualified tax professional.
Are Roth accounts subject to RMDs?
The original owner of a Roth IRA generally has no lifetime RMD requirement. Beneficiaries of Roth IRAs and participants in designated Roth employer-plan accounts can be subject to separate rules.
Can RMD planning help coordinate my retirement income?
RMDs can be one part of a broader review of retirement-account withdrawals, other income sources, expected expenses, and potential tax effects. The appropriate approach depends on your financial situation and applicable rules.
Understand how RMDs fit into your retirement-income picture.
Reviewing distribution requirements alongside other retirement resources can help you identify questions to discuss with your financial and tax professionals.
Request an Introductory ConversationEducational disclosure: This material is for general educational and informational purposes only and should not be construed as individualized investment, tax, legal, or accounting advice. Rules can change and may apply differently based on your circumstances. Consult qualified professionals regarding your specific situation. Rosenberg Wealth Management does not guarantee any particular financial or tax outcome.
IRS information is provided as a starting point for further research. Always consult current official guidance and your plan or account administrator for rules that apply to your situation.