Required Minimum Distributions (RMDs) are mandatory withdrawals from certain retirement accounts once you reach a specific age. The IRS requires these withdrawals to ensure you eventually pay taxes on your tax-deferred retirement savings.
Key Facts:
- When do RMDs start? Age 73 for those born 1951-1959, age 75 for those born 1960 or later
- Which accounts require RMDs? Traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k)s, 403(b)s, 457(b)s, and other defined contribution plans
- Which accounts DON'T require RMDs? Roth IRAs (during owner's lifetime), Roth 401(k)s after rollover to Roth IRA
- What's the penalty? 25% of the amount you should have withdrawn (reduced to 10% if corrected within 2 years)
- Deadlines: December 31 each year (April 1 following the year you turn RMD age for your first RMD only)
Important Notes:
- You can always withdraw MORE than the required minimum
- RMDs count as taxable income
- For Traditional IRAs, you can aggregate the total RMD and take it from one or multiple accounts
- Each 401(k), 403(b), or other employer plan RMD must be taken from that specific account
- If you're still working at age 73+, you may be able to delay RMDs from your current employer's plan (but not IRAs)