Required Minimum Distribution
A Required Minimum Distribution (RMD) is the minimum amount the IRS mandates that holders of Traditional IRAs, 401(k)s, and most other pre-tax retirement accounts withdraw annually beginning at a specified age.
Required Minimum Distributions exist because the government allowed retirement assets to grow tax-deferred — but never intended that deferral to last forever. The IRS eventually demands its share through mandatory withdrawals that generate taxable income. Failing to take the full RMD by the deadline triggers one of the harshest tax penalties in the code: 25% of the shortfall (reduced to 10% if corrected within the 'correction window' under SECURE Act 2.0 rules).
The SECURE Act (2019) raised the RMD starting age from 70½ to 72. SECURE Act 2.0 (2022) raised it further: to age 73 for individuals who turned 72 after December 31, 2022, and to age 75 for those born in 1960 or later. The first RMD may be delayed until April 1 of the year following the year you reach the RMD starting age, but that means taking two RMDs in the same calendar year (the delayed first RMD and the second year's RMD), potentially creating a larger tax bill.
The annual RMD amount is calculated by dividing the account's December 31 prior-year balance by an IRS life expectancy factor from the Uniform Lifetime Table (Publication 590-B). As you age, the divisor shrinks and the required percentage grows. For a 73-year-old, the divisor is 26.5 (about 3.8% of balance); at 85, it is 16.0 (about 6.25%); at 90, 12.2 (about 8.2%).
RMDs apply to Traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k)s, 403(b)s, and 457(b)s. Roth IRAs are notably exempt from RMDs during the owner's lifetime — one of their most powerful estate planning advantages. Roth 401(k) and 403(b) accounts were historically subject to RMDs, but SECURE Act 2.0 eliminated that requirement starting in 2024. Inherited IRAs (Beneficiary IRAs) are subject to their own special RMD rules. Qualified Charitable Distributions (QCDs) allow taxpayers aged 70½ or older to donate up to $105,000 (2025) per year directly from their IRA to a qualified charity, satisfying the RMD obligation without recognizing the income.