Tax-deferred accounts are a deferral, not an exemption. Required minimum distributions are the point at which the deferral ends, and the rules have changed enough recently that older guidance is actively misleading.
From age 73, you must withdraw a minimum amount each year from most tax-deferred retirement accounts. The figure is last 31 December's balance divided by an IRS life expectancy factor. The penalty for missing one is 25% of the shortfall, or 10% if corrected promptly. Roth IRAs are exempt for the original owner, and since 2024 so are Roth 401(k)s.
When they start
Age 73 for anyone who reached 72 after 31 December 2022. The threshold is legislated to rise to 75 in 2033.
If you turned 72 before 2023 you were already taking them under the earlier rules and should carry on.
The still-working exception. If you are still employed and do not own more than 5% of the business, you can generally delay RMDs from that employer's plan until you retire. It does not apply to IRAs, and it does not apply to old 401(k)s from previous employers — those keep their own clock.
How the amount is worked out
Two inputs, one division.
RMD = account balance on 31 Dec last year ÷ life expectancy factorThe factor comes from the IRS Uniform Lifetime Table. It shrinks as you age, so the required percentage rises each year — modest in the seventies, considerably larger by the late eighties.
One exception: if your sole beneficiary is a spouse more than ten years younger, you use the Joint Life table instead, which gives a larger divisor and a smaller withdrawal.
You can always take more than the minimum. You just cannot take less.
Your first RMD may be delayed until 1 April of the following year. It sounds like a useful grace period and it frequently is not.
Every subsequent RMD is due by 31 December. So if you delay the first one to April, you take two distributions in the same tax year — the delayed one and that year's. Both count as income in that year, which can push you into a higher bracket, increase the taxable portion of your Social Security, and raise your Medicare premiums two years later through IRMAA.
For most people, taking the first RMD in the year it is due is simpler and cheaper. The delay is worth using only when you have a specific reason, such as a year of unusually low income ahead.
Which accounts are covered
| Account | RMD required? |
|---|---|
| Traditional IRA | Yes |
| SEP and SIMPLE IRA | Yes |
| 401(k), 403(b), 457(b) | Yes |
| Roth IRA (original owner) | No |
| Roth 401(k) | No, from 2024 onwards |
| Inherited accounts | Yes, under separate rules |
Aggregation differs by type, and this trips people up. Calculate the RMD for each IRA separately, then withdraw the total from whichever IRA you like. 401(k)s cannot be aggregated — each plan's amount must come out of that plan.
Two ways to reduce the bill
Qualified charitable distributions. From age 70½ you can send money directly from an IRA to a qualifying charity. It counts toward your RMD and is excluded from taxable income — which is better than taking the distribution and claiming a deduction, because it keeps your adjusted gross income down and therefore your Social Security taxation and Medicare premiums with it. There is an annual limit; the IRS publishes it.
Roth conversions before 73. Converting traditional balances to Roth in lower-income years — often between retiring and starting Social Security — shrinks the balance that RMDs are later calculated from. You pay tax on the conversion now to avoid larger forced withdrawals later. Whether that helps depends on your bracket then versus now, which is a genuine calculation rather than a rule.
If you miss one
Do not ignore it. Take the missed amount as soon as you notice, then file Form 5329. You can request a waiver of the penalty by attaching a statement explaining the reason and the correction — the IRS does grant these where the shortfall was due to reasonable error and has been fixed.
Correcting promptly, within the correction window, reduces the penalty from 25% to 10%.
What to do each year
- Note your 31 December balance for every covered account
- Look up your factor in the current IRS table — it changes with age
- Divide, and calendar the withdrawal well before December
- Check the aggregation rules if you hold several accounts
- Consider a QCD if you give to charity anyway
- Set up automatic distributions if your provider offers them — this is the single most reliable way not to miss one
This is general information, not tax or financial advice — see our disclaimer.
Frequently asked questions
At what age do RMDs start?
Age 73 for those who reached 72 after the end of 2022. It rises to 75 in 2033. If you turned 72 before 2023 you were already under the previous rules and should continue as you were.
How is the amount calculated?
Your account balance on 31 December of the previous year, divided by a life expectancy factor from the IRS Uniform Lifetime Table. Older age means a smaller divisor and a larger required withdrawal.
What happens if I miss one?
The penalty is 25% of the shortfall, reduced to 10% if you correct it promptly within the correction window. That is much lower than the 50% it used to be, but it is still a penalty worth avoiding.
Do Roth accounts have RMDs?
Roth IRAs have never had them for the original owner. Roth 401(k)s were subject to RMDs until 2024, when that requirement was removed. Inherited accounts follow separate rules.
Can I take all my RMDs from one account?
For IRAs, yes — calculate for each but withdraw the total from any one or more of them. For 401(k)s, no; each plan's RMD must come from that plan.
Sources
Found an error? Email us and we will fix it and note the change at the bottom of this article. Hello@daily-atlas.com
