Quick overview

Required Minimum Distributions (RMDs) are the IRS’s method for ensuring that taxes deferred inside retirement accounts—like traditional IRAs, 401(k)s and other employer plans—are eventually paid. As of 2025 the normal starting age for RMDs is 73 for most account owners, following changes enacted by the SECURE Acts. The RMD rules affect retirement income, tax planning, gifting, and estate transfers; misunderstanding them can result in unnecessary taxes, lost flexibility, or excise penalties.

(Authoritative source: IRS Retirement Topics — Required Minimum Distributions) [https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds].

How RMDs are calculated

The IRS calculation is straightforward in principle but requires the right inputs:

  1. Account balance: Use the fair market value of the account as of December 31 of the prior year for each account subject to RMD rules.
  2. Distribution period (life expectancy factor): Use the IRS Uniform Lifetime Table, the Joint Life and Last Survivor Table (if the sole beneficiary is a spouse more than 10 years younger), or the Single Life Table for certain beneficiary situations.
  3. Formula: Account balance ÷ distribution period = RMD for the year.

Example: If an IRA had $200,000 on December 31 and the applicable distribution period is 26.5, the RMD is 200,000 ÷ 26.5 = $7,547.

Notes and special cases:

  • If you have multiple IRAs, calculate each IRA’s RMD separately, but you may aggregate distributions and withdraw the total from one or more IRAs. Employer plans (401(k), 403(b)) generally require separate RMDs and aggregation rules differ.
  • If you are still working and own a 401(k) with your employer, you may be able to delay RMDs from that plan until you retire—if you are not a 5% owner and the plan allows it. Always confirm plan documents.

(IRS table and rules: IRS Retirement Topics — RMDs).

Recent rule changes that matter (summary)

  • SECURE Act (2019): Raised the RMD age from 70½ to 72 for those who reached 70½ after 2019.
  • SECURE 2.0 Act (2022): Raised the RMD age again to 73 starting in 2023 for affected taxpayers and phased further increases in later years. SECURE 2.0 also reduced the excise tax for missed RMDs and made other technical changes to retirement law.

(Reference: Public Law and IRS guidance — SECURE Act and SECURE 2.0).

Penalties for missed RMDs (what changed)

Historically the penalty for failing to take an RMD was 50% of the amount not withdrawn. SECURE 2.0 reduced that excise tax: the default excise tax was lowered to 25% of the missed amount, and in many cases the penalty can be reduced to 10% if the taxpayer corrects the mistake in a timely manner and meets IRS conditions for relief. Even with the lower rates, timely action is critical to avoid a significant excise tax. See IRS guidance for the latest procedures and how to request relief.

(IRS, Retirement Topics — RMDs).

Who is affected

  • Account owners of tax‑deferred plans: traditional IRAs, SEP IRAs, SIMPLE IRAs, and most employer plans (401(k), 403(b), 457(b)).
  • Beneficiaries of inherited retirement accounts: rules differ depending on when the original owner died and the beneficiary’s relationship to the decedent. For many inherited IRAs where the owner died after 2019, the 10‑year rule generally requires full distribution within 10 years unless the beneficiary is an eligible designated beneficiary.
  • Roth IRAs: No RMDs apply to the original Roth IRA owner during their lifetime, but inherited Roth IRAs do have distribution rules for beneficiaries.

(IRS guidance: Inherited IRAs and SECURE Act changes).

Practical planning strategies and alternatives

  1. Roth conversions
  • Convert traditional IRA or pre-tax 401(k) dollars to a Roth IRA in years where taxable income is lower. Roth IRAs grow tax-free and do not require RMDs for the original owner, which reduces future RMD tax exposure and helps manage future tax brackets.
  • Consider partial conversions over multiple years to avoid pushing yourself into a higher tax bracket. See our Roth conversion guidance for execution details and pitfalls. (See: Roth conversion strategies).
  1. Qualified Charitable Distributions (QCDs)
  • A QCD lets an IRA owner (meeting the IRS age requirement) transfer up to a specified annual limit directly to a qualified charity. QCDs can satisfy all or part of an RMD and are excluded from taxable income.
  • QCDs are especially useful when a taxpayer does not itemize deductions or wants to satisfy philanthropic goals while managing taxable income. See our QCD guide for step‑by‑step guidance. (See: Qualified Charitable Distributions: A Guide for IRA Owners).
  1. Timing and sequencing withdrawals
  • Take RMDs in years with lower other income to avoid pushing into higher tax brackets.
  • If you expect large one‑time income (sale of a business, large bonus), accelerate Roth conversions or take taxable withdrawals earlier to smooth taxable income across years.
  1. Use of employer plans and cash flow management
  • If still working and plan rules allow, delaying RMDs from an employer plan (e.g., 401(k)) until retirement can reduce current taxable income and give more control over timing.
  • Coordinate RMDs with Social Security claiming and Medicare IRMAA thresholds.
  1. Estate and beneficiary planning
  • Understand which beneficiaries qualify for special treatment (spouse, minor child under certain rules, disabled, chronically ill, or individuals not more than 10 years younger) vs. those subject to the 10‑year rule.
  • Consider beneficiary designations, trust structures, and whether a stretch is available under current law.
  1. Charitable remainder trusts and donor-advised funds
  • For larger balances, charitable remainder trusts (CRTs) or donor‑advised funds (DAFs) may offer tax-efficient ways to turn RMDs into an income stream or immediate charitable impact while providing tax benefits.

Common mistakes and how to avoid them

  • Relying on outdated RMD ages: Laws have changed; confirm the applicable RMD age for your birth year and tax year. (See IRS guidance.)
  • Forgetting to consider account‑specific rules: 401(k) aggregation and plan provisions can change how and when you must withdraw.
  • Failing to claim relief: If an RMD is missed, take the distribution immediately, file Form 5329 and attach an explanation or use the IRS process to request a waiver; SECURE 2.0 made penalty relief easier in some situations.
  • Not coordinating with tax planning: Large RMDs can spike taxable income, increase Medicare premiums, and affect tax credits.

Real-world examples (illustrative)

Example 1 — Smoothing taxes with partial Roth conversions
Married couple, ages 68 and 70, expect RMDs beginning at 73. They convert $40,000 of traditional IRA money to a Roth in two $20,000 chunks across two low‑income years. This reduces future RMDs, keeps later taxable income lower, and reduces the chance of higher Medicare IRMAA surcharges in retirement.

Example 2 — Using a QCD to meet philanthropic intent and reduce taxable income
An IRA owner age‑qualified for QCDs directs $30,000 of the year’s RMD directly to a qualified charity. The transfer satisfies the RMD and the $30,000 is excluded from taxable income, producing a lower adjusted gross income for the year.

Note: Examples are illustrative and not individualized advice.

Step-by-step checklist to handle RMDs correctly

  1. Confirm the applicable RMD age for your birth year and the current tax year.
  2. Pull December 31 account statements for each account subject to RMD rules.
  3. Identify the correct IRS table and life expectancy factor for each account.
  4. Calculate the RMD for each account and total any IRA aggregation adjustments.
  5. Decide whether to take RMDs from IRAs, employer plans, or use QCDs/other strategies.
  6. Schedule distributions and withhold taxes if desired. Keep documentation.
  7. If you miss an RMD, take it immediately and consult a tax professional about filing Form 5329 and requesting relief.

Where to look for official guidance

Internal resources and further reading

Professional disclaimer

This article is educational and reflects current rules and common planning approaches as of 2025. It is not individualized tax or legal advice. Consult a qualified tax professional, retirement plan administrator, or financial advisor before implementing strategies that affect taxes, benefits, or estate plans.

Author note

In my 15+ years advising retirees and pre‑retirees, the single most common issue I see is failing to coordinate distributions with broader tax and benefits planning. Thoughtful use of Roth conversions, QCDs, and timing decisions typically yields the best long‑term outcome when executed with professional guidance.