You spend decades putting money into a traditional IRA or 401(k) and letting it grow tax-deferred. Eventually, the IRS says it's time to start taking it out.
That's a required minimum distribution, or RMD. The idea is simple, but the details trip people up. Here's what you need to know.
What is an RMD?
An RMD is the minimum amount you must withdraw from certain retirement accounts each year once you reach a specific age.¹ You can always take more than the minimum. Withdrawals from pre-tax accounts are generally taxed as ordinary income.¹
RMDs apply to traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k)s, 403(b)s, 457(b)s, and other workplace retirement plans.² Roth IRAs, and Roth money inside a 401(k) or 403(b), don't require withdrawals while the original owner is alive.¹
When do RMDs start?
It depends on the year you were born.³ ⁴ ⁵
| Year of birth | RMD age |
|---|---|
| 1959 or earlier | 73 |
| 1960 or later | 75 |
If you were born before 1951, you've already started RMDs under older rules that used an earlier starting age.³
The deadlines
Each RMD is due by December 31.¹
Your first one has a twist. You can delay it until April 1 of the following year.¹ But your second RMD is still due December 31 of that same year, which means two RMDs, and two chunks of taxable income, in one year. Sometimes that's fine. Sometimes it pushes you into a higher bracket. It's worth running the numbers before you decide.
How to calculate your RMD
Take your account balance from December 31 of last year and divide it by the distribution period for your age from the IRS Uniform Lifetime Table.⁶
For example, a 73-year-old with $1,000,000 in an IRA would divide by 26.5, for an RMD of about $37,736.
| Age | Distribution period | RMD as % of balance | RMD on $1,000,000 |
|---|---|---|---|
| 73 | 26.5 | 3.77% | $37,736 |
| 75 | 24.6 | 4.07% | $40,650 |
| 80 | 20.2 | 4.95% | $49,505 |
| 85 | 16.0 | 6.25% | $62,500 |
| 90 | 12.2 | 8.20% | $81,967 |
The full table is in IRS Publication 590-B.⁶ If your spouse is your only beneficiary and is more than 10 years younger than you, you use a different table that results in a smaller RMD.²
Notice that the percentage goes up every year. If your investments keep growing, your RMD in dollars can keep climbing well into your 80s.
If you have more than one account
- IRAs: Calculate each one separately, then take the total from any one or more of your IRAs.²
- 403(b)s: Same approach. You can combine them.²
- 401(k)s and 457(b)s: Each plan's RMD has to come from that plan.²
An IRA withdrawal won't satisfy a 401(k) RMD, and vice versa. This is one reason people consolidate old 401(k)s. We covered that in Should You Roll Over Your Old 401(k) to an IRA?
Still working?
If you're still working at your RMD age, your current employer's plan may let you wait until you retire to start RMDs from that plan.¹ This doesn't apply if you own more than 5% of the company, and it never applies to IRAs.¹
What if you miss one?
The amount you didn't take may be subject to a 25% excise tax, or 10% if you correct it within two years.² The IRS can waive the penalty if the shortfall was a reasonable error and you fix it. You request that on Form 5329 with a letter of explanation.²
Also worth knowing: taking extra this year doesn't count toward next year,² and an RMD can't be rolled over or converted to a Roth.⁶ ⁷
Inherited IRAs
The rules are different if you inherit an account.
A surviving spouse has the most options, including treating the IRA as their own.⁶ A few other beneficiaries, such as a minor child of the owner or someone not more than 10 years younger than the owner, can spread withdrawals over their life expectancy.⁶
Most other beneficiaries, including most adult children, have to empty the account within 10 years.⁶ If the original owner had already started RMDs, the beneficiary also has to take a withdrawal each year along the way.³
Planning ideas worth knowing
Use the years before RMDs start. The years between retirement and your RMD age are often lower-income years. Some people use them for partial Roth conversions, which can shrink future RMDs. Roth IRAs have no RMDs for the original owner.¹ More in When and How to Do a Roth Conversion.
Give directly from your IRA. At 70½ or older, a qualified charitable distribution (QCD) sends money straight from your IRA to charity. It counts toward your RMD and isn't included in your taxable income, up to $111,000 per person in 2026.⁶ See How QCDs Work.
Watch the ripple effects. A bigger RMD raises your income, which can affect your Medicare premiums and how much of your Social Security is taxed. See IRMAA in 2026.
Use withholding for taxes. Tax withheld from an RMD is generally treated as if it were paid evenly throughout the year, even if you take the RMD in December.⁸ That can make it a simple way to cover your taxes.
The bottom line
RMDs apply to almost everyone with a traditional IRA or 401(k). Know your RMD age, know which accounts you have, and don't let December 31 sneak up on you. The bigger opportunity is planning ahead, because the decisions you make in your 60s can change what your RMDs look like in your 70s and 80s.
If you'd like to talk through your RMD picture, give our office a call at 920-380-7056 or email hello@dreyerwealth.com.
The Dreyer Wealth Management Team
This material is for general information only and is not intended as tax, legal, or investment advice. Examples are hypothetical and rounded. Tax laws are subject to change, and state tax treatment varies. Please consult your tax professional regarding your specific situation. Dreyer Wealth Management does not provide tax or legal advice.
Sources
- Internal Revenue Service, "Retirement Topics: Required Minimum Distributions (RMDs)": https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds
- Internal Revenue Service, "Retirement Plan and IRA Required Minimum Distributions FAQs": https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs
- Federal Register, "Required Minimum Distributions," Final Regulations, T.D. 10001, July 19, 2024: https://www.federalregister.gov/documents/2024/07/19/2024-14542/required-minimum-distributions
- Internal Revenue Service, Internal Revenue Bulletin 2024-33: https://www.irs.gov/irb/2024-33_IRB
- Federal Register, "Required Minimum Distributions," Proposed Regulations, REG-103529-23, July 19, 2024: https://www.govinfo.gov/content/pkg/FR-2024-07-19/pdf/2024-14543.pdf
- Internal Revenue Service, Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs): https://www.irs.gov/publications/p590b
- Internal Revenue Service, Publication 590-A (2025), Contributions to Individual Retirement Arrangements (IRAs): https://www.irs.gov/publications/p590a
- Internal Revenue Service, Instructions for Form 2210 (2025): https://www.irs.gov/instructions/i2210