📋 Table of Contents
Required Minimum Distributions (RMDs) Explained
RMDs are mandatory withdrawals the IRS requires from most tax-deferred retirement accounts starting at a certain age, ensuring the government eventually collects tax on funds that grew tax-deferred.
When RMDs Begin
Current rules require RMDs to begin at age 73 for most account holders, applying to Traditional IRAs, 401(k)s, and similar tax-deferred accounts — Roth IRAs are notably exempt from RMDs during the original owner's lifetime.
Calculating Your RMD
| Factor | Role in Calculation |
|---|---|
| Account balance (prior year-end) | Base amount for calculation |
| IRS life expectancy factor | Divides the balance based on your age |
The Penalty for Missing an RMD Is Significant
Failing to take a required RMD can trigger a penalty of 25% of the amount not withdrawn (reduced to 10% if corrected promptly) — a meaningful cost worth avoiding through careful planning.
Common Mistakes
Forgetting to take an RMD, or miscalculating the required amount — many account custodians can calculate this for you, but the ultimate responsibility rests with the account holder.
Frequently Asked Questions
Current rules require RMDs to begin at age 73 for most tax-deferred retirement accounts.
No — Roth IRAs are exempt from RMDs during the original account owner's lifetime, a notable advantage over Traditional IRAs and 401(k)s.