Required minimum distributions (RMDs)

For years you put money into a traditional IRA or a 401(k) and paid no income tax on it. The law does not let that go on for your whole life. Starting at age 73 or 75, you have to withdraw at least a set amount every year and pay income tax on it. That amount is your required minimum distribution, or RMD.¹ The amount is a small share of the account at first and a larger share each year after. It is required whether or not you need the money to live on. This page explains the rules in plain words: which accounts have RMDs, when yours start, how the amount is figured, what happens if you miss one, how it is taxed, and what people do to lower it. Nothing here is advice about your accounts. It is the rules, with the arithmetic shown.

What is a required minimum distribution?

A required minimum distribution is the least you must withdraw from a retirement account in a year once you reach the starting age. The rules cover traditional IRAs, SEP IRAs, SIMPLE IRAs, and workplace plans such as 401(k), 403(b), 457(b) and profit-sharing plans.¹

Roth accounts are the exception. A Roth IRA has no RMDs while its owner is alive, and neither does a Roth account inside a 401(k) or 403(b). The people who inherit a Roth account do have to follow RMD rules.¹

The amount is a minimum. You can withdraw more in any year. A larger withdrawal this year does not count toward next year's RMD.¹

One more exception applies to people who are still working. If you are still employed by the company that sponsors your workplace plan, you can generally wait to start RMDs from that plan until the year you retire, unless you own more than 5% of the business. The exception covers that employer's plan only. Your IRAs start at the regular age even if you are still working.¹

At what age do RMDs start?

Your starting age depends on the year you were born.²

People born in 1953 reach 73 in 2026, so 2026 is their first RMD year. People born in 1959 start at 73, in 2032, under the Treasury's proposed rule. People born in 1960 start at 75, in 2035. So nobody has a first RMD year in 2033 or 2034.

An RMD is the total you must withdraw for one year. You can take it in one withdrawal or in several. The total for your first year gets extra time: it has to be out by April 1 of the year after you reach the starting age. The total for every later year has to be out by December 31 of that year.³

Waiting until April 1 has a cost. The amount for your second year is still due by December 31 of that same year, so two years' amounts are withdrawn and taxed in one year. Someone born in 1953 can take the 2026 amount any time in 2026, or as late as April 1, 2027. If they wait, the 2027 amount is also due by December 31, 2027, and both are taxed on the 2027 return.³ Our first RMD timing calculator compares the two choices.

Each withdrawal has two years attached to it. The RMD year is the year whose requirement it satisfies. The tax year is the year the money left the account. A withdrawal taken any time in the year you reach the starting age counts for that year, even before your birthday.¹²

Here is one person both ways. The figures are hypothetical: born in 1953, a traditional IRA of $1,000,000 on December 31, 2025, and no growth in the account. Each amount is the balance divided by a factor from the table in the next section: 26.5 at age 73 and 25.5 at age 74.

Our RMD deadline calculator does this for your own withdrawals. You enter each date and amount, and it shows the RMD year and the tax year for each one.

How is an RMD calculated?

You divide the account's balance on December 31 of the year before by a factor for your age. The factors come from the Treasury's Uniform Lifetime Table, which the IRS reprints in Publication 590-B.⁴

Suppose you turn 73 this year and your traditional IRA held $1,000,000 last December 31. The factor at 73 is 26.5. Your RMD is $1,000,000 divided by 26.5, which is about $37,736. That is about 3.8% of the account. At 85 the factor is 16.0, so the same $1,000,000 balance would mean an RMD of $62,500. These are hypothetical figures, to show the arithmetic.⁴

One group uses a different table. If your spouse is the only person named to inherit the account and is more than 10 years younger than you, you use the Joint Life and Last Survivor table, which gives a smaller RMD.⁴

If you have more than one account, you figure the RMD for each one separately. For IRAs, you can then add the amounts and withdraw the total from any one IRA or from several. The same is true among 403(b) accounts. A 401(k) or a 457(b) is different: each plan's RMD has to come out of that plan.⁵

The firm that holds your IRA, or your plan's administrator, may figure the amount for you. You are still the one responsible for withdrawing the right amount on time.⁵

The RMD calculator does this arithmetic from your balance and birth year, and shows the next ten years.

What is the penalty for missing an RMD?

If you do not withdraw the full RMD by the deadline, the amount you left in may be subject to a penalty tax of 25%. The rate drops to 10% if you take the missed amount and correct the mistake within two years. You report it on Form 5329, a tax form that goes with your return.⁶

The IRS may waive the penalty. You have to show that the shortfall came from a reasonable error and that you are taking reasonable steps to fix it. You ask for the waiver on Form 5329 and attach a letter of explanation.⁶

How are RMDs taxed?

An RMD is taxed as ordinary income at your regular rate. The exception is any part that is a return of money you already paid tax on, such as nondeductible IRA contributions.⁷

The RMD is added to your other income for the year. A large one can move part of your income into a higher bracket. It can raise the share of your Social Security benefits that is taxed, because that share is figured from your income. It can also raise your Medicare premiums two years later, because those premiums are set from the income on your tax return two years before.⁷

Illinois treats RMDs differently from the federal government. Illinois subtracts distributions from IRAs and qualified employer plans when it figures your state income tax, so an RMD that is taxed on your federal return is not taxed on your Illinois return.⁸ Our Illinois retirement income tax calculator shows which kinds of income Illinois taxes and which it does not.

Can you lower your RMDs, or the tax on them?

You cannot skip an RMD once you reach the starting age. You can affect how much money is in pre-tax accounts when RMDs begin, and where a withdrawal goes. People use four approaches. Each one has a cost, and none of them fits everyone.

Roth conversions before RMDs begin. Many people have a few years between their last paycheck and their first RMD when their income is lower than it was and lower than it may be later. Money converted from a traditional IRA to a Roth IRA in those years is taxed in the year of the conversion. After that it has no RMDs during your life. The cost is the tax you pay now. Once RMDs begin, the RMD itself cannot be converted. You have to take the RMD first, and then you may convert more.⁹ Our Roth conversion room calculator and Roth conversion ladder planner show what a conversion of a given size would cost.

Gifts to charity straight from the IRA. From age 70½, you can have your IRA pay an eligible charity directly. This is a qualified charitable distribution, or QCD. Up to $111,000 per person in 2026 is left out of your income, and it counts toward your RMD for the year.¹⁰ A QCD helps only if you already give to charity. The QCD limit for 2026 explains the rules.

Withdrawals before you are required to take them. Some people take money from pre-tax accounts in their lower-income years, before RMDs begin, and leave other savings alone for longer. The pre-tax balance is then smaller when RMDs start. The cost is paying tax sooner. The order you draw from your accounts covers this choice.

The timing of the first year's RMD. You can take the amount for your first year during that year, or wait until April 1 of the next year and take two years' amounts in one year. The better choice depends on your income in each of the two years.

What goes wrong with RMDs?

These are the mistakes we see most often.

An old 401(k) at a former employer is left out. People add up everything they owe and take it all from an IRA. The 401(k)'s amount has to come out of that 401(k), so it is still missed.⁵

People hear that the first year's amount can wait until April 1 and treat it as extra time. They learn at tax time that two years' amounts landed on one return.³

People wait until the last weeks of December. A processing delay or an illness then pushes the withdrawal past the 31st.

People convert money to a Roth IRA early in the year, before they have taken that year's RMD. The RMD has to come out first.⁹

People who give to charity take the RMD in cash and then write checks. A gift paid straight from the IRA could have counted toward the RMD and stayed out of their income.¹⁰

Couples add their two RMDs together and take the total from one spouse's account. Each spouse's RMD has to come from that spouse's own accounts.⁵

No tax is withheld from the withdrawal, and the bill in April is a surprise.

After a death, the family does not know that the person had not yet taken that year's RMD. If the person's RMDs had already begun, the people who inherit the account are responsible for taking it.¹¹

Each of these is a mistake of timing or paperwork, and each can lead to a penalty or a larger tax bill than the rules required.

Which calculator answers your question?

• How much is this year's RMD, and the next ten? RMD calculator
• Should the first RMD be taken this year or by April 1? First RMD timing
• Which year does each withdrawal count for? RMD deadline calculator
• How much can be converted before the next tax bracket? Roth conversion room
• What would yearly conversions cost over time? Roth conversion ladder planner
• When can converted money come out without tax or penalty? Roth five-year rule calculator
• Is a gift from the IRA better than a check? QCD or cash gift?
• How much of a backdoor Roth conversion is taxed? Backdoor Roth pro-rata calculator
• Which rules apply to an IRA you inherited? Inherited IRA rules
• How can money come out before 59½ without the penalty? 72(t) payments calculator
• Is there company stock in the 401(k)? Net unrealized appreciation calculator

Where we fit in. We integrate tax considerations into your investment strategy and collaborate with estate attorneys and CPAs to ensure your plan is coordinated. We are not a law firm or accounting firm, so we do not provide legal or tax advice. Everything in this material is for educational purposes, based on primary sources. Before taking any action, please consult the appropriate professionals to apply these ideas to your situation.

The years before your first RMD are often when you have the most choices about how this money is taxed. If you would like to look at your accounts and those years with someone, we are glad to have that conversation.