Quick Answer:
Required minimum distributions start at age 73 for anyone born between 1951 and 1959, and at 75 for those born in 1960 or later. You calculate each year’s RMD by dividing your prior-year-end account balance by an IRS life-expectancy factor. At age 73 that factor is 26.5, so a $500,000 balance produces a first RMD of about $18,868.
Key takeaways:
– RMDs start at 73 for those born 1951 to 1959, and at 75 for those born in 1960 or later.
– Your first RMD can be delayed to April 1 of the year after you turn 73; every RMD after is due December 31.
– The calculation is simple: prior-year-end balance divided by your IRS life-expectancy factor.
– Missing an RMD triggers a 25% penalty, reduced to 10% if you correct it promptly.
For decades the government let your traditional retirement accounts grow untaxed. Required minimum distributions are how it finally collects. Once you reach the trigger age, you must withdraw a minimum amount each year, and it’s taxable. Here’s exactly when they start and how to figure the amount.
When do required minimum distributions start?
Required minimum distributions start at age 73 for most of today’s retirees. Under the IRS required minimum distribution rules, the trigger age depends on your birth year, and it stepped up under recent law changes.
| Birth Year | RMD Start Age |
|---|---|
| 1950 or earlier | 72 (already began) |
| 1951 to 1959 | 73 |
| 1960 or later | 75 |
The move to 75 takes effect for those who reach that age in 2033 and beyond. RMDs apply to traditional IRAs and most employer plans like 401(k)s. Roth IRAs have no required withdrawals during the owner’s lifetime, which is one of their biggest advantages.
Can you delay your first RMD?
You can delay your very first RMD, but only that one, and there’s a catch. Your first required distribution can be postponed until April 1 of the year after you turn 73. Every RMD after that, including the same year you use the April 1 delay, is due by December 31.
The catch is that delaying your first RMD to April 1 means taking 2 RMDs in the same calendar year, the delayed first one plus that year’s regular one. Doubling up your taxable withdrawals in a single year can push you into a higher bracket, so the delay isn’t automatically a good idea. For most retirees, taking the first RMD in the year you turn 73 is cleaner.
How do you calculate your RMD?
You calculate your RMD by dividing your account balance by a life-expectancy factor from the IRS. Work it in these steps:
1. Find your prior-year-end balance. Use the December 31 value of your traditional IRA or 401(k) from the year before.
2. Look up your factor. Find your age in the IRS Uniform Lifetime Table. The factor is a distribution period that gets smaller as you age.
3. Divide. Balance divided by factor equals your RMD for the year.
4. Repeat for each account type. IRAs can be aggregated and taken from one, but employer plans are generally figured and taken separately.
Here are 3 common factors from the Uniform Lifetime Table.
| Age | Distribution Factor |
|---|---|
| 73 | 26.5 |
| 75 | 24.6 |
| 80 | 20.2 |
What does an RMD calculation look like in practice?
A worked example makes it concrete. Suppose you turn 73 this year with $500,000 in a traditional IRA as of last December 31. Your factor at 73 is 26.5. Divide $500,000 by 26.5 and your RMD for the year is about $18,868. That’s the minimum you must withdraw, and all of it is taxed as ordinary income.
As you age, the factor shrinks, so the required percentage of your balance rises each year even if the balance stays flat. That rising draw is why large traditional balances can create a growing tax problem later in retirement. The tax treatment of these withdrawals is covered in how are IRA and 401(k) withdrawals taxed, and ways to shrink future RMDs are in how to reduce RMDs before age 73.
What happens if you miss an RMD?
Missing an RMD triggers a penalty, but the penalty is far less harsh than it used to be. If you fail to take the full required amount by the deadline, the shortfall is subject to a 25% excise tax. That drops to 10% if you correct the mistake promptly, generally within 2 years, by taking the missed amount and filing the right form.
The penalty is on top of the ordinary income tax you’ll still owe on the withdrawal. The good news is that the IRS routinely waives the penalty for a reasonable, promptly corrected error. Still, the simplest path is to automate your RMD so it’s taken every year without you having to remember.
Do you still have to take RMDs if you’re still working?
If you’re still working past 73, you may be able to delay RMDs from your current employer’s plan, but not from your IRAs. The still-working exception lets you postpone required withdrawals from the 401(k) at the job you currently hold, as long as you don’t own more than 5% of the company. Your RMD from that plan can wait until you actually retire.
The exception is narrow. It doesn’t apply to traditional IRAs, which require withdrawals at 73 whether you’re working or not, and it doesn’t cover 401(k)s from former employers. Those old plans still owe RMDs on the normal schedule. One common fix is to roll old 401(k)s into your current employer’s plan before 73, if the plan allows it, so the still-working exception can shelter them too. It’s a useful move for people who plan to work well into their 70s.
Frequently Asked Questions
Do Roth IRAs have required minimum distributions?
Not during the original owner’s lifetime. Roth IRAs are exempt from RMDs while you’re alive, and Roth 401(k)s no longer have lifetime RMDs either. Inherited accounts follow separate rules.
Do I have to take an RMD from every account separately?
For IRAs, you can total the required amounts and take the whole thing from any one IRA. Employer plans like 401(k)s are generally calculated and withdrawn separately from each plan.
Is my RMD based on this year's balance or last year's?
Last year’s. Your RMD uses the account balance as of December 31 of the prior year, divided by your current-age factor.
Can I reinvest or donate my RMD instead of spending it?
You can’t skip the RMD, but you can donate it directly to charity through a qualified charitable distribution, which satisfies the RMD without adding it to your taxable income. You can also reinvest the after-tax proceeds in a taxable account if you don’t need the cash.
RMDs are simple to calculate once you know the trigger age and the factor, but the tax they create is worth planning for years ahead. If you’d like to project your future RMDs and soften them early, request a meeting and we’ll run the numbers.
About the Author
Kurt Supe, CPA, is a Retirement Planner and Chief Investment Officer for Creative Financial Group. He has spent 30 years helping retirees lower their lifetime tax bills. Connect on X and YouTube at @KurtSupeCPA, or read more on the CFG team page.