RMD Rules: How Required Minimum Distributions Work and How to Minimize Taxes

When RMDs Start: Age 73, 75, or Later

The age at which RMDs begin depends on your birth year. Under the SECURE 2.0 Act (effective 2023-2033), the RMD starting age phased upward. If you were born before 1951, RMDs started at age 72. If you were born between 1951 and 1959, RMDs start at age 73. If you were born in 1960 or later, RMDs start at age 75. The first RMD must be taken by April 1 of the year after you reach the applicable age. For subsequent years, the RMD must be taken by December 31 of each year.

This distinction matters: the first RMD deadline is April 1 of the year after you turn the RMD age, but that means you will have to take two RMDs in the same year — your first RMD (by April 1) and your second RMD (by December 31). This bunched income can push you into a higher tax bracket. Most retirees take their first RMD by December 31 of the year they turn the RMD age, avoiding the double-withdrawal year. For example, if you turn 73 in 2026, you can take your first RMD by December 31, 2026, and your second by December 31, 2027, avoiding any bunched income. See our tax planning guide for strategies to manage RMD tax brackets.

How RMD Amounts Are Calculated

Your RMD amount is calculated by dividing your account balance as of December 31 of the previous year by a life expectancy factor from the IRS Uniform Lifetime Table. The table provides a life expectancy factor that decreases as you age, meaning RMDs increase as a percentage of your portfolio over time. At age 73, the factor is 26.5, so your RMD is roughly 3.77% of your balance. At age 80, the factor is 20.2, so your RMD is roughly 4.95%. At age 90, the factor is 12.4, so your RMD is roughly 8.06%.

Example calculation: You have $1,000,000 in your Traditional IRA on December 31, 2025. You turn 73 in 2026. Your life expectancy factor from the Uniform Lifetime Table for age 73 is 26.5. Your 2026 RMD = $1,000,000 / 26.5 = $37,735.85. You must withdraw at least $37,735.85 by December 31, 2026 (unless this is your first RMD, in which case you have until April 1, 2027). You can withdraw more than this amount, but the excess does not count toward future RMDs. You can also aggregate RMDs across multiple IRAs — you calculate the total RMD across all IRAs and take it from any one IRA or a combination. For 401(k) plans, RMDs must be taken separately from each plan unless the plan allows aggregated withdrawals. If you have a spouse who is more than 10 years younger and is the sole beneficiary of your IRA, you use the Joint Life and Last Survivor Expectancy Table, which gives a higher factor (lower RMD). See our inherited IRA guide for RMD rules for inherited accounts.

Penalties for Missing RMDs

The penalty for failing to take your full RMD by the deadline is substantial. Under the SECURE 2.0 Act, the penalty was reduced from 50% to 25% of the amount not withdrawn. If you correct the missed RMD within the correction window (usually within 2 years of the missed deadline), the penalty is further reduced to 10%. This is still a significant penalty, so it is crucial to take your RMDs on time.

Example: Your RMD is $40,000, but you only withdraw $30,000. The shortfall is $10,000. The penalty is 25% of $10,000 = $2,500. If you discover the error and withdraw the remaining $10,000 within 2 years, the penalty drops to 10% = $1,000. You also owe income tax on the $10,000 you eventually withdraw. Many IRA custodians will calculate your RMD for you and offer automatic withdrawal options. However, you are ultimately responsible for ensuring the correct amount is withdrawn. If you have multiple IRAs, your custodian may only know the balance of accounts at that institution, not your total IRA balance, so you must do the aggregation calculation yourself. For a detailed analysis of RMD penalties and corrections, see our tax planning guide.

Strategies to Reduce RMD Taxes

RMDs are taxed as ordinary income, and large RMDs can push you into higher tax brackets, increase Medicare premiums (IRMAA surcharges), and increase the taxability of Social Security benefits. There are several strategies to reduce the tax impact of RMDs.

Qualified Charitable Distributions (QCDs): If you are age 70.5 or older, you can donate up to $100,000 per year directly from your IRA to a qualified charity. The QCD counts toward your RMD but is not included in your adjusted gross income, reducing AGI and potentially lowering Medicare premiums and Social Security taxation. QCDs are the single most effective RMD reduction strategy for charitably inclined retirees. Roth conversions before RMDs start: Converting Traditional IRA money to Roth IRA before RMD age reduces your Traditional IRA balance, lowering future RMDs. The conversion itself is taxable, but you can control the amount you convert each year to stay within your desired tax bracket. Delay Social Security: If you have not yet claimed Social Security when RMDs begin, consider your RMD income may push some of your Social Security benefits into being taxable. Delaying RMDs does not reduce them, but planning the interaction between RMD income and Social Security taxation can save thousands. Roth 401(k): If you are still working, rolling your Traditional IRA into a workplace 401(k) does not eliminate RMDs but may delay them if you are still employed and the plan allows it. For a complete analysis of tax reduction strategies for retirees, read our Roth conversion ladder guide.

Real-World RMD Example

John and Mary are both 73 and have $1.5 million in Traditional IRAs. Their RMD for the year is approximately $56,600 ($1.5M / 26.5). They also have $40,000 in Social Security benefits and $20,000 in pension income. Their total income is $116,600. They are in the 22% federal tax bracket. They make a $20,000 QCD to their local food bank, reducing their AGI by $20,000. Their taxable income drops to $96,600. They stay in the 12% bracket on the QCD-reduced portion. The QCD saves them approximately $4,400 in federal tax (22% of $20,000) plus potential Medicare IRMAA surcharges. Over 20 years of retirement, QCDs could save them $88,000 or more in taxes. John and Mary also converted $50,000 of their Traditional IRA to Roth IRA each year from age 60 to 70, reducing their IRA balance by $500,000 (plus growth on that converted money). Their RMD at age 73 is approximately $37,700 instead of $56,600 — a 33% reduction. Had they not done Roth conversions, their RMD would be 50% higher. Combining Roth conversions and QCDs is the most powerful one-two punch for RMD tax management. Explore more retirement tax strategies to minimize your lifetime tax burden.

How is my RMD calculated if I have multiple IRAs?

You calculate your RMD for each IRA separately using each account's December 31 balance, but you can withdraw the total RMD amount from any one IRA or combination of IRAs. For example, if IRA A has an RMD of $10,000 and IRA B has an RMD of $15,000, you can withdraw $25,000 from IRA A and $0 from IRA B, or split it between both. This flexibility allows you to manage taxes by choosing which assets to sell. For 401(k) plans, you cannot aggregate — each 401(k) RMD must be taken from that specific 401(k) unless the plan allows otherwise. Always confirm your RMD calculation with your tax professional, as errors can be costly.

Can I take RMDs from a Roth IRA?

No, Roth IRAs do not have RMDs during the original owner's lifetime. This is a major advantage of Roth accounts. You can leave money in a Roth IRA for your entire life, and it grows tax-free the entire time. However, inherited Roth IRAs do have RMDs — if you inherit a Roth IRA, you must take distributions over your life expectancy (or within 10 years if you are a non-spouse beneficiary under the SECURE Act). The RMDs from inherited Roth IRAs are tax-free as long as the original owner had the account for at least 5 years. This makes Roth IRAs an excellent estate planning tool. See our inherited IRA guide for RMD rules for beneficiaries.

What is a Qualified Charitable Distribution (QCD) and how does it reduce RMDs?

A QCD is a direct transfer from your IRA to a qualified charity. If you are age 70.5 or older, you can donate up to $100,000 per year directly from your IRA. The QCD counts toward your RMD for the year, but the distribution is excluded from your adjusted gross income. This means you satisfy your RMD requirement without paying income tax on the distribution. QCDs also reduce your AGI, which can lower Medicare Part B and D premiums (IRMAA surcharges), reduce the taxability of Social Security benefits, and potentially lower the threshold for itemized deductions. QCDs can only be made from Traditional IRAs, not from 401(k)s or other workplace plans. You cannot take the distribution yourself and then donate it — it must go directly from the IRA custodian to the charity. For charitably inclined retirees, QCDs are the most tax-efficient way to satisfy RMDs.

Do I have to take RMDs from my 401(k) if I am still working?

If you are still working at the company that sponsors your 401(k) plan, and you own less than 5% of the company, you may be able to delay RMDs from that specific 401(k) plan until April 1 of the year after you retire. This "still-working exception" does not apply to IRAs or to 401(k) plans from previous employers. If you have a 401(k) from a previous job, you must take RMDs from that plan starting at the applicable age regardless of your current employment status. To avoid this, you can roll your old 401(k) into your current employer's 401(k) before RMD age. You still must take RMDs from IRAs even if you are still working — the still-working exception only applies to the 401(k) of your current employer. See our 401(k) rollover guide for details on consolidating retirement accounts.

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