What are Required Minimum Distributions (RMDs)?

Key takeaways

• The required minimum distribution (RMD) is the minimum amount that must be withdrawn annually from tax-deferred retirement accounts once the account holder reaches the applicable RMD age. RMD age depends on birth year. People who own retirement accounts born between 1951 and 1959 must begin taking required minimum distributions at age 73. Those born in 1960 or later must begin by begin at age 75, a change that takes effect in 2033 under the SECURE 2.0 Act, per the Congressional Research Service.
• RMDs are calculated by dividing the prior year-end account balance by an IRS life expectancy factor. For a traditional IRA owner who turned 73 in 2026 with a $500,000 balance, the 2026 RMD is approximately $18,868, using the Uniform Lifetime Table factor of 26.5, per IRS Publication 590-B.
• Every dollar withdrawn counts as ordinary income in the year it is taken. RMD amounts are added to taxable income for that calendar year, which can affect tax bracket placement and Medicare premium calculations.
• The penalty for missing an RMD is 25 percent of the amount not withdrawn. That penalty is reduced to 10 percent if the shortfall is corrected within two years, per IRS guidance under the SECURE 2.0 Act.
• Roth IRAs and designated Roth accounts in workplace plans are exempt from RMDs during the owner’s lifetime. The IRS does not require distributions from these accounts while the original owner is alive, per IRS Publication 590-B.

At some point, the IRS requires that money held in tax-deferred retirement accounts begin moving out. The logic is straightforward. When a worker contributes to a traditional IRA or a 401(k), those contributions reduce taxable income in the year they are made. The IRS allows that tax advantage to compound for decades, but not indefinitely. Required minimum distributions, or RMDs, are the mechanism by which the federal government ensures that tax-deferred savings are eventually drawn down and taxed.

The rules governing RMDs changed significantly with the passage of the original SECURE Act of 2019 and the SECURE 2.0 Act of 2022, followed by final IRS regulations that took effect January 1, 2025. Understanding the current framework requires knowing which accounts are affected, at what age distributions must begin, how the annual amount is calculated, and what happens when the deadline is missed.

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The SECURE Act 2.0 and RMD ages

Before 2020, RMDs were required to begin at age 70½. The SECURE Act of 2019 raised that age to 72, effective January 1, 2020, for account holders who had not yet reached age 70½ by December 31, 2019. The SECURE 2.0 Act, signed in December 2022, raised the age again and introduced a second increase scheduled for 2033.*

As of 2026, the applicable RMD age depends on birth year, per the Congressional Research Service analysis of SECURE 2.0. Those born between 1951 and 1959 have an RMD age of 73. Those born in 1960 or later will have an RMD age of 75, a change that becomes effective January 1, 2033.

RMDs apply to traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k) plans, 403(b) plans, 457(b) governmental plans, and profit-sharing plans. Roth IRAs are exempt from RMDs during the original owner’s lifetime. Since 2024, designated Roth accounts in 401(k) and 403(b) plans also became exempt from pre-death RMD requirements under the SECURE 2.0 Act, per IRS guidance.

Age requirements and deadlines

The required beginning date, or RBD, is the deadline by which an account holder’s first Required Minimum Distribution (RMD) must be taken. For IRA owners, the RBD is April 1 of the year following the year in which they reach their applicable RMD age.

While the IRS allows an account holder to delay that very first RMD until April 1, doing so means two RMDs will fall into the same calendar year. The first (covering the prior year) is due by April 1, and the second (covering the current year) is due by December 31. This “double distribution” artificially inflates their taxable income for that year, which can easily put them into a higher tax bracket and impact things like their Medicare premiums. Let’s say Sarah turns her applicable RMD age in 2026.

Option A: Spreading them out (Recommended): Sarah takes her first RMD (for 2026) in December 2026. She then takes her second RMD (for 2027) in December 2027. She pays income tax on exactly one RMD per calendar year.

Option B: Delaying the first RMD (The Trap): Sarah decides to wait. She exercises her right to delay her first RMD (for 2026) until her RBD on April 1, 2027. However, she must also take her second RMD (for 2027) by December 31, 2027.

*A drafting error in the SECURE 2.0 Act created ambiguity for those born in 1959. IRS final regulations issued in July 2024 resolved this. Individuals born in 1959 have an RMD age of 73, per the Federal Register (89 FR 58886).

Because Option B forces Sarah to report two distributions on her 2027 tax return, her adjusted gross income (AGI) spikes significantly for that single year, potentially subjecting her to a higher tax rate.

One exception applies to defined contribution workplace retirement plans. Participants in a 401(k), 403(b), or other defined contribution workplace plan who are not five-percent owners of the business sponsoring the plan may delay RMDs from that plan until the year they retire, per IRS FAQ on RMDs. This exception does not apply to IRAs, which require distributions to begin at the applicable RMD age regardless of employment status.

Calculating RMDs

The annual RMD is calculated by dividing the account balance as of December 31 of the prior year by a life expectancy factor published by the IRS. For most account owners, the applicable table is the Uniform Lifetime Table, Table III in Appendix B of IRS Publication 590-B. The life expectancy factor decreases each year, meaning the required withdrawal percentage of the account balance increases over time.

The formula is straightforward. Take the prior December 31 account balance and divide it by the applicable IRS life expectancy factor for the account holder’s age in the distribution year.

Using the Uniform Lifetime Table, the factor at age 73 is 26.5 and the factor at age 75 is 24.6, per IRS Publication 590-B. Two examples drawn from those figures:

• An account holder aged 73 in 2026 with a $500,000 prior year-end balance arrives at approximately $18,868 by dividing $500,000 by 26.5.
• An account holder aged 75 in 2026 with a $400,000 prior year-end balance arrives at approximately $16,260 by dividing $400,000 by 24.6.

The only time the Uniform Lifetime Table does not apply is when the account holder’s sole primary beneficiary is a spouse who is more than 10 years younger.

In this specific scenario, the account holder uses the Joint and Last Survivor Life Expectancy Table instead. Because of the significant age gap, this table factors in a longer combined life expectancy, which results in a lower required minimum distribution (RMD) amount, allowing them to keep more money growing tax-deferred in the account for longer.

Multiple Accounts and the Aggregation Rules

When an individual owns multiple retirement accounts, calculating and satisfying Required Minimum Distributions (RMDs) depends entirely on the types of accounts they hold.

While the mathematical result of an RMD calculation is the same whether accounts are pooled or treated individually, the IRS enforces vastly different rules for IRAs versus workplace retirement plans due to how these accounts are legally administered.

Traditional IRAs and 403(b) Plans: Aggregation Permitted

For traditional IRAs and 403(b) plans, the IRS allows for “aggregation.” Account holders must still calculate the RMD for each individual account separately based on its prior year-end balance. However, the total RMD amount can be summed up and withdrawn from any single account or combination of accounts within that specific category.

Note: IRA RMDs cannot be satisfied from a 403(b), and vice versa.

401(k) and Other Workplace Plans: No Aggregation Allowed

For 401(k) plans and other defined contribution workplace accounts, aggregation is strictly prohibited. If an individual holds multiple 401(k) plans from past employers, the RMD for each plan must be calculated and withdrawn from that specific plan independently.

Why the Distinction Exists

From a purely mathematical standpoint, pooling accounts works flawlessly: 10/2 + 6/2 is the same as (10+6)/2.

However, the IRS cannot prioritize mathematical simplicity over institutional structure. The restriction on 401(k) aggregation exists due to plan sponsorship and fiduciary liability:

• Independent Administration: Unlike a personally owned IRA, a 401(k) is a distinct legal trust sponsored by an employer. The plan administrator has a legal obligation to ensure their specific plan complies with tax laws. Because they cannot verify an individual’s account balances or actions at another company, they must enforce the distribution from their own plan.
• IRS Reporting Requirements: Each 401(k) provider is required to report distributions to the IRS independently on Form 1099-R. The IRS requires a direct match between that specific plan’s required distribution and its actual withdrawal to verify compliance.

Go Further: The IRS Uniform Lifetime Table, which is the primary tool for calculating annual RMD amounts, is published in Appendix B of IRS Publication 590-B. The table lists the life expectancy factor for each age beginning at 72. The full publication, including the table and worked calculation examples, is available at irs.gov/publications/p590b.

Penalties for skipping an RMD

If an account holder fails to take a Required Minimum Distribution (RMD), the IRS imposes a steep 25% excise tax penalty on the amount they missed. This penalty must be reported using IRS Form 5329 and is due when they file their regular federal income tax return for the year the RMD was skipped.

However, under the SECURE 2.0 Act, they can reduce this penalty to 10% if they correct the mistake within a two-year window. How they claim this lower rate depends entirely on their timing:

• Catch and fix the mistake before filing taxes: The account holder can bypass the 25% penalty entirely. They simply withdraw the missed RMD, calculate the lower 10% penalty directly on Form 5329, and pay that smaller amount with their tax return.
• Discover the mistake after already filing and paying the 25% penalty: The account holder must make up the missed withdrawal and then file an amended tax return (Form 1040-X) along with a corrected Form 5329. This prompts the IRS to refund their the 15% difference.

Alternatively, if the account holder missed the RMD due to a reasonable error, such as a medical emergency or a banking oversight, they do not have to settle for the 10% rate. They can ask the IRS to waive the penalty entirely. To request a total waiver, they must first withdraw the missed amount, fill out Form 5329, entering ‘0’ on the penalty line, and attach a letter explaining the situation and proving that the mistake has been corrected.

Qualified charitable distributions

Account holders who are age 70½ or older may make a qualified charitable distribution (QCD) directly from a traditional IRA, inherited IRA, or inactive SEP or SIMPLE IRA to a qualifying 501(c)(3) charitable organization. Notably, a QCD counts directly toward satisfying the Required Minimum Distribution (RMD) for the year. If the RMD is $10,000 and the account holder makes a $10,000 QCD, that donation completely satisfies their requirement, meaning it is the only distribution they need to make that year.

Go Further: An inactive SEP (Simplified Employee Pension) IRA is a retirement account that a business owner previously established but is no longer actively contributing to. This usually happens because the employer has paused company contributions, closed the business, or switched to a different type of retirement plan. Although new funds aren’t being added, the account remains open, and the existing balance continues to grow tax-deferred under the control of the account holder.

The transferred amount is excluded from the account holder’s ordinary income rather than being added to taxable income as a standard distribution would be. However, to count toward the RMD, the QCD must be the first money that leaves their account during the calendar year. Because the IRS considers the earliest withdrawals of the year to be their RMD, coordinating the direct transfer to the charity first ensures the distribution is fully tax-free and no additional personal withdrawals are required.

The QCD eligibility age of 70½ is lower than the current RMD age of 73. An IRA owner between the ages of 70½ and 73 may make QCDs and receive the income exclusion benefit before RMDs begin. In those years, a QCD does not satisfy an RMD because no RMD is yet required, but it still reduces the taxable income generated by the distribution.

Once RMDs do begin, a QCD can satisfy all or part of the account holder’s annual RMD requirement. For example, if their RMD is $10,000 and they make a $10,000 QCD, that donation completely satisfies their requirement, making it the only distribution they need to take that year. The annual QCD limit is $111,000 per individual, and the transfer must be made directly from the IRA custodian to the qualifying charity. QCDs cannot be made from 401(k) or other workplace plans, and they cannot be directed to donor-advised funds or private foundations.

How a financial advisor can help

RMD planning intersects with income tax management, Medicare premium calculations, Social Security benefit taxation, and estate planning simultaneously. A qualified financial advisor or tax professional can help account holders model the tax consequences of different RMD timing strategies, evaluate whether a QCD is appropriate given charitable giving goals, and calculate whether taking distributions before the required beginning date reduces future RMD amounts.

Match with an advisor.

FAQs

Do RMDs apply to Roth IRAs? 

Not during the original owner’s lifetime. The IRS does not require distributions from Roth IRAs while the account owner is alive, per IRS Publication 590-B. Roth IRAs may grow tax-free indefinitely without mandatory withdrawals. Beneficiaries who inherit a Roth IRA are generally subject to distribution requirements, including the 10-year rule for non-eligible designated beneficiaries under the SECURE Act.

Can more than the minimum required amount be withdrawn? 

Yes. Account holders may withdraw any amount above the RMD without penalty. The full distribution, including any excess above the RMD, is included in taxable income for that year. Amounts withdrawn above the RMD do not reduce the following year’s RMD requirement, which is calculated independently based on the December 31 account balance of the prior year.

What is the still-working exception for defined contribution workplace plans? 

Participants in a 401(k), 403(b), or other defined contribution workplace plan who are not five-percent owners of the sponsoring business may delay RMDs from that plan until the year they retire. This exception applies only to the workplace plan where the participant is still employed. It does not apply to IRAs, and it does not apply to prior employer plans. Account holders who are still working but also hold traditional IRAs must take RMDs from those IRAs on the standard schedule, per IRS RMD FAQs.

Glossary

• Form 5329. A tax form filed with the annual federal return to report and pay the excise tax on missed required minimum distributions, or to request a penalty waiver with an attached explanation.
• Joint and Last Survivor Life Expectancy Table. Table II in Appendix B of IRS Publication 590-B, used by account owners whose sole beneficiary is a spouse who is 10 or more years younger. It produces a lower required distribution than the Uniform Lifetime Table, extending the life of the account.
• Ordinary income. Income taxed at standard federal income tax rates, including wages, salaries, and distributions from tax-deferred retirement accounts. RMD amounts are treated as ordinary income in the year they are received.
• Qualified charitable distribution (QCD). A direct transfer of up to $111,000 per individual in 2026 from a traditional IRA or eligible account to a qualifying 501(c)(3) charitable organization. Available to account holders age 70½ or older. The transferred amount is excluded from the account holder’s taxable income and may satisfy all or part of the annual RMD requirement once RMDs have begun.
• Required beginning date (RBD). The deadline by which an account holder must take the first required minimum distribution. For IRA owners, the RBD is April 1 of the year following the year in which the applicable RMD age is reached.
• Required minimum distribution (RMD). The minimum amount that must be withdrawn annually from tax-deferred retirement accounts once the account holder reaches the applicable RMD age. The amount is calculated by dividing the prior December 31 account balance by an IRS life expectancy factor.
• SECURE Act. The Setting Every Community Up for Retirement Enhancement Act, signed in December 2019. The law raised the RMD age from 70½ to 72, effective January 1, 2020, for account holders who had not yet reached 70½ by December 31, 2019.
• SECURE 2.0 Act. Legislation passed in December 2022 that built on the original SECURE Act. Key RMD changes include raising the RMD age to 73 beginning in 2023 and to 75 beginning in 2033, reducing the missed-RMD penalty from 50 percent to 25 percent, exempting designated Roth accounts in workplace plans from pre-death RMDs beginning in 2024, and clarifying the still-working exception.
• Uniform Lifetime Table. Table III in Appendix B of IRS Publication 590-B, used by most account owners to determine the life expectancy factor applied in the RMD calculation. The factor decreases by approximately one each year, producing a gradually increasing required withdrawal percentage.

Sources

• IRS – Retirement Topics: Required Minimum Distributions: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds
• IRS – Retirement Plan and IRA Required Minimum Distributions FAQs: https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs
• IRS – Retirement Plans FAQs Regarding IRA Distributions: https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-distributions-withdrawals
• IRS – Publication 590-B, Distributions from Individual Retirement Arrangements: https://www.irs.gov/publications/p590b
• IRS – About Form 5329, Additional Taxes on Qualified Plans: https://www.irs.gov/forms-pubs/about-form-5329
• IRS – Final RMD Regulations, Federal Register 89 FR 58886: https://www.federalregister.gov/documents/2024/07/19/2024-14542/required-minimum-distributions
• Congressional Research Service – Required Minimum Distribution Rules for Original Owners of Retirement Accounts (IF12750): https://www.congress.gov/crs-product/IF12750
• Congressional Research Service – Qualified Charitable Distributions from IRAs (IF11377): https://www.congress.gov/crs_external_products/IF/PDF/IF11377/IF11377.3.pdf

Disclaimer: Steady Retire and MediaFeed are providers of educational content and information. This article is intended for informational and illustrative purposes only and does not constitute financial, legal, tax, or investment advice. The information provided does not create a professional-client relationship and should not be used as a substitute for consultation with a qualified financial advisor, tax professional, or attorney. While we strive to provide accurate and up-to-date information, rules and regulations regarding retirement are subject to change. Always consult with a certified professional regarding your specific financial situation.

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