Required Minimum Distribution (RMD)
The minimum amount the IRS requires you to withdraw each year from tax-deferred retirement accounts starting at age 73. Failure to take your RMD triggers a 25% excise tax on the shortfall.
Required Minimum Distributions (RMDs) are mandatory annual withdrawals from tax-deferred retirement accounts, including Traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k)s, 403(b)s, and most other employer-sponsored plans. The SECURE 2.0 Act of 2022 raised the starting age to 73 for individuals who turn 72 after December 31, 2022, with a further increase to age 75 scheduled for 2033.
Your annual RMD is calculated by dividing your account balance as of December 31 of the prior year by a life expectancy factor from IRS Publication 590-B Uniform Lifetime Table III. For example, a 75-year-old with a $400,000 IRA balance would use a factor of 24.6, producing an RMD of approximately $16,260. Spouses more than 10 years younger than the account owner may use the more favorable Joint and Last Survivor Table.
Failing to withdraw the full RMD results in an excise tax of 25% of the amount not withdrawn, reduced to 10% if corrected within the two-year correction window. Roth IRAs are exempt from RMDs during the original owner's lifetime, making them powerful tools for tax-free wealth transfer and flexible retirement income planning.
How it works
Required Minimum Distributions force money out of tax-deferred retirement accounts — Traditional IRAs, SEP and SIMPLE IRAs, 401(k)s, 403(b)s, and most other employer plans — once you reach the mandatory starting age. SECURE 2.0 pushed that age to 73 for people turning 72 after 2022, with a further move to 75 scheduled for 2033. The amount is not a fixed percentage; it's your account balance as of December 31 of the prior year divided by an IRS life-expectancy factor from the Uniform Lifetime Table, so the required amount rises as a share of the balance the older you get.
In practice, most custodians calculate the figure for you and will flag it on your statement, but the legal obligation to actually take the withdrawal by the deadline sits with you, not the brokerage. A spouse who is more than 10 years younger than the account owner can use the more generous Joint and Last Survivor Table instead, which produces a smaller required withdrawal because it factors in the younger spouse's longer expected lifespan.
Roth IRAs are exempt from RMDs during the original owner's lifetime, which is one reason people convert Traditional balances to Roth before RMD age. Missing an RMD is expensive: the shortfall is hit with a 25% excise tax, though that drops to 10% if you catch and correct the mistake within the IRS's two-year correction window — so an overlooked RMD is a fixable error, not an automatic full-rate penalty, as long as you act promptly.
Example: calculating an RMD
A 75-year-old with a $650,000 Traditional IRA balance as of December 31 of the prior year uses the Uniform Lifetime Table factor for that age, 24.6. Dividing $650,000 by 24.6 gives a required distribution of about $26,423 for the year.
If this person only withdrew $20,000 by the deadline, they'd have a $6,423 shortfall. At the standard 25% excise tax, that's a $1,605.75 penalty — but if they withdraw the missing amount and file the correction within the two-year window, the excise tax drops to 10%, or about $642.30.
Frequently asked questions
At what age do I have to start taking RMDs?
What happens if I miss my RMD deadline?
Do Roth IRAs have RMDs?
Related Terms
Traditional IRA
An individual retirement account where contributions may be tax-deductible and investments grow tax-deferred. The 2025 contribution limit is $7,000 ($8,000 if age 50+).
401(k)
An employer-sponsored retirement savings plan that lets you contribute pre-tax income (or after-tax with Roth 401(k)). The 2025 employee contribution limit is $23,500.
Roth IRA
A retirement account funded with after-tax dollars. Qualified withdrawals in retirement — including all growth — are completely tax-free. The 2025 contribution limit is $7,000 ($8,000 if 50+).
Required Minimum Distribution (RMD)
The minimum amount you must withdraw annually from tax-deferred retirement accounts like Traditional IRAs and 401(k)s starting at age 73. Roth IRAs are exempt from RMDs during the owner's lifetime.