Required Minimum Distributions, in plain English
What an RMD is, when yours starts, how much it is, and what to do if one is missed.
The short answer
An RMD is money the IRS says you must take out of most retirement accounts each year once you reach a certain age. You pay income tax on it.
You saved in these accounts before tax. The tax was put off, not erased. RMDs are how the IRS finally collects it.
When do RMDs start?
| Born in | First RMD is for the year you turn |
|---|---|
| 1951 to 1959 | 73 |
| 1960 or later | 75 |
You may still see 70½ or 72 on older websites. Those were the old rules.
Your first RMD can wait until April 1 of the next year. Every RMD after that is due by December 31.
Watch the April 1 trap. If you wait until April 1, you take two RMDs that year. Two in one year can push you into a higher tax bracket.
Which accounts have RMDs?
- Traditional, SEP and SIMPLE IRAs.
- Most work plans, such as a 401(k), 403(b) or 457(b).
- Still working? Your current job’s plan may let you wait until you retire, if you own less than 5% of the company.
- Not Roth IRAs while the owner is alive.
- Not Roth accounts in work plans, since 2024.
- Inherited accounts have their own rules. Many must be emptied within 10 years.
How much do you have to take?
Take the account’s value on December 31 of last year. Divide it by a number from the IRS table for your age. That is your RMD.
The number gets smaller each year, so the share you must take gets bigger as you age. Try the RMD calculator for an estimate.
What if you miss one?
The IRS can charge a tax on the amount you did not take. It is 25%. It drops to 10% if you fix it in time.
| Item | Amount |
|---|---|
| RMD you had to take | $10,000 |
| What you took | $8,000 |
| Short by | $2,000 |
| Tax at 25% (or 10% if fixed in time) | $500 (or $200) |
You still owe income tax on the missed amount when you take it. You can ask the IRS to waive the penalty for an honest mistake. You do that on Form 5329, with a short note.
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Who should pay attention?
Anyone with an IRA or a work retirement plan. And their family. If a parent missed RMDs, the children who inherit may have to fix it.
Source: IRS, RMD questions and answers.
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Rather talk it through? Schedule a meeting or call (408) 786-0508.