Ask five retirees what is an RMD and you will likely get five nervous shrugs. A required minimum distribution is the amount the IRS forces you to withdraw from your tax-deferred retirement accounts every year once you hit a certain age. The government let that money grow untaxed for decades, and now it wants its cut. Miss the deadline and the penalty stings, so this is one rule worth understanding before it understands you.
What changed in 2026
The big shift came from the SECURE 2.0 Act, and its effects are fully in force now:
- Start age is 73. If you turn 73 in 2026, this is your first RMD year. The age is scheduled to climb to 75 in 2033, so younger readers get a longer runway.
- The penalty is softer than it used to be. The old 50% excise tax on a missed RMD is gone. It is now 25%, and drops to 10% if you fix the shortfall within a short correction window.
- Roth 401(k)s no longer have lifetime RMDs. Since 2024, employer Roth accounts join Roth IRAs on the exempt list.
How your RMD is actually calculated
The formula is less scary than the acronym. Take your account balance as of December 31 of the prior year, then divide by a life-expectancy factor from the IRS Uniform Lifetime Table. That factor shrinks a little each year, which is why your required percentage creeps up as you age.
A rough example: a balance near $500,000 divided by a factor in the mid-20s lands you around a $19,000 withdrawal. The factor depends on your age, so pull the current table from IRS.gov rather than trusting a number from a blog post.
Two aggregation quirks matter:
- IRAs pool together. Own three traditional IRAs? Calculate each RMD, then take the total from any one of them.
- 401(k)s do not. Each employer plan is calculated and withdrawn separately. No cross-plan shuffling.
When you must start (and the April trap)
Your Required Beginning Date is April 1 of the year after you turn 73. That sounds generous, but it is a trap. Delay that first withdrawal to the following April and you will owe two RMDs in the same calendar year — the delayed one plus that year's regular one. Stacking two taxable distributions can shove you into a higher bracket, inflate Medicare premiums, and tax more of your Social Security.
For most people, the cleaner move is to take the first RMD in the year you turn 73 and keep every future one on the December 31 deadline.
Which accounts are exempt
Not every retirement dollar is on the hook. Roth money is the standout: no lifetime RMDs for the original owner.
| Account type |
RMDs required? |
Notes |
| Traditional IRA |
Yes |
Aggregate across all your IRAs |
| Traditional 401(k) / 403(b) |
Yes |
Calculated per plan |
| SEP and SIMPLE IRA |
Yes |
Same rules as traditional IRA |
| Roth IRA |
No |
Exempt during owner's lifetime |
| Roth 401(k) |
No |
Exempt since 2024 |
| Inherited IRA |
Usually |
Often a 10-year drawdown window |
One honest caveat: inherited accounts play by different rules. Many non-spouse heirs must empty the account within 10 years, and some owe annual RMDs during that window too. If you inherited an IRA, treat it as its own puzzle and confirm your specific timeline.
Smart ways to soften the tax hit
RMDs are taxed as ordinary income, but you have levers:
- Qualified Charitable Distributions (QCDs). From age 70 and a half, you can send up to an inflation-indexed limit (roughly six figures — verify the current cap) straight from your IRA to charity. It counts toward your RMD and never lands on your tax return as income. This is the single best tool for the charitably inclined.
- Roth conversions before 73. Converting traditional dollars to Roth in your 60s shrinks the future balance that RMDs are calculated from. You pay tax now to avoid forced withdrawals later.
- Take it early in the year. Waiting until December is fine, but it risks a forgotten deadline and a market dip forcing a sale at a bad price.
What to skip: reinvesting an RMD into the same tax-deferred account. You cannot. Once out, the money goes to a taxable brokerage or a Roth (if you have earned income and qualify).
FAQ
Do I pay tax on my RMD?
Yes, at ordinary income rates for traditional accounts. Only Roth withdrawals escape tax, and Roths generally have no RMD anyway.
What if I am still working at 73?
You may be able to delay RMDs on your current employer's 401(k) until you retire, provided you do not own more than 5% of the company. IRAs get no such break.
Can I take more than the minimum?
Absolutely. The RMD is a floor, not a ceiling. Just remember extra withdrawals are extra taxable income for the year.
What happens if I miss it entirely?
You owe a 25% excise tax on the shortfall, cut to 10% if you correct it quickly and file Form 5329. File promptly and you can even request a waiver.
Where to go next
Keep building your retirement playbook. If yields on your idle cash confuse you, read APR vs APY in 2026. To right-size your portfolio as you approach RMD age, see asset allocation by age in 2026. And to shrink future RMDs before they start, study the backdoor Roth IRA in 2026.