What an RMD is
A required minimum distribution (RMD) is the smallest amount you must withdraw from a tax-deferred account — like a traditional IRA or 401(k) — each year once you reach RMD age. The government let that money grow tax-deferred for decades, and RMDs are how it finally collects the tax.
When RMDs start
Under current rules RMDs begin at age 73 (rising to 75 in future years). Your first can be delayed to April 1 of the year after you turn 73, but every year after is due by December 31. Roth IRAs have no RMDs during the owner's lifetime.
The formula
The math is simple: account balance as of last December 31, divided by a life-expectancy factor from the IRS Uniform Lifetime Table. At 73 that factor is about 26.5, so a $500,000 balance means roughly $18,900 that year. As you age the factor shrinks and the required percentage rises. The calculator above does this for you.
The penalty for missing one
Skipping an RMD is expensive: the penalty is 25% of the amount you failed to withdraw (reduced to 10% if you fix it promptly). This is one deadline you don't want to miss — set a reminder for each December.
Planning around RMDs
Because RMDs are taxable income, a large one can push you into a higher bracket or raise your Medicare premiums. Two common softeners: Roth conversions in your 60s (which shrink future RMDs), and giving directly from an IRA to charity. If you've inherited an account the rules differ — see the inherited IRA calculator.
Common questions
Do I take an RMD from every account? You calculate one per account, but with IRAs you can total them and withdraw from any one. 401(k)s generally must be taken separately.
Can I reinvest my RMD? Yes — you must withdraw and pay tax on it, but you can move what's left into a regular taxable account.
What if I'm still working? You may be able to delay RMDs from your current employer's 401(k) until you retire, if the plan allows it.