What Is a Required Minimum Distribution? RMDs Explained

What a Required Minimum Distribution Is

A Required Minimum Distribution (RMD) is the minimum amount the IRS requires a retirement account owner to withdraw from certain tax-deferred accounts each year, starting at a specific age. The rule exists because the government has deferred taxation on contributions and growth in traditional IRAs, 401(k)s, and similar accounts — the RMD ensures that deferred tax eventually gets collected.

Without the RMD rule, account owners could theoretically allow tax-deferred balances to grow indefinitely and pass the entire amount to heirs, converting what was intended as a retirement income vehicle into an effectively permanent tax shelter. The RMD forces recognition of income — and payment of ordinary income tax — over the account owner’s remaining lifetime.

The accounts subject to the RMD rules include: traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k) plans, 403(b) plans, 457(b) governmental plans, and other employer-sponsored retirement plans. Roth IRAs are explicitly exempt from RMD rules during the owner’s lifetime (though inherited Roth IRAs follow different rules).

When RMDs Begin: The SECURE 2.0 Age Change

The age at which RMDs must begin has been raised twice in recent years. As of the SECURE 2.0 Act (signed December 2022):

• Born after December 31, 1950: RMDs begin at age 73.
• Born before January 1, 1951: RMDs began at age 72 (or 70½ for those under the original pre-SECURE Act rules).

The first RMD must be taken by April 1 of the year following the year the account owner turns 73. This one-time grace period means that a person turning 73 in 2025 could delay their first RMD until April 1, 2026 — but if they do, they will also need to take the second RMD by December 31, 2026. Taking two distributions in one calendar year may push them into a higher tax bracket, so many account owners choose to take the first RMD in the year they turn 73 rather than deferring it.

After the first distribution year, all subsequent RMDs must be taken by December 31 of each calendar year.

How the RMD Is Calculated

The calculation is straightforward:

RMD = Account Balance ÷ Distribution Period

Account balance is the fair market value of the account as of December 31 of the prior year. If you are calculating the 2026 RMD, you use the December 31, 2025 balance. For accounts spread across multiple institutions, the RMD is calculated separately for each IRA (though you may aggregate IRA withdrawals and take the total from any combination of IRAs). 401(k) RMDs must be taken from each plan separately.

Distribution period is a life-expectancy factor from the IRS Uniform Lifetime Table (IRS Publication 590-B, Appendix B, Table III). Most account owners use this table. It gives a distribution period for each age from 72 through 120, with older ages having shorter distribution periods, which produces larger mandatory withdrawals as a percentage of the balance.

Worked example: A 73-year-old with an account balance of $500,000 on December 31 of the prior year:

Distribution period (age 73): 26.5 years
RMD = $500,000 ÷ 26.5 = $18,867.92

The effective withdrawal rate at age 73 is approximately 3.77% of the balance. This rate rises each year as the distribution period decreases.

The table is not your personal life expectancy. The Uniform Lifetime Table factors are actuarial assumptions built to spread distributions over a joint lifetime (the account owner and a hypothetical beneficiary 10 years younger). Individual life expectancy may be shorter or longer. The table simply sets the minimum withdrawal floor; you may always withdraw more.

How the Distribution Period Changes With Age

The distribution period decreases each year, which means the RMD as a percentage of the account balance increases:

Source: IRS Uniform Lifetime Table (Treasury Reg. § 1.401(a)(9)-9, effective 2022). Distribution periods rounded for display; the full table values are used in calculation.

These rates compound with market growth and decline. If an account grows at 6% annually, the 3.77% withdrawal at 73 does not deplete it — the account balance may continue growing despite the RMD. But at higher distribution rates in the mid-80s and beyond, the combination of withdrawals and possible portfolio drawdowns can reduce the balance more rapidly.

How to Use the RMD Calculator

The calculator takes two inputs: your account balance (the prior December 31 value) and your current age. It returns:

• The distribution period from the IRS table for that age
• The RMD amount (balance ÷ distribution period)
• The effective withdrawal rate (RMD ÷ balance)
• The remaining balance after the RMD

If you have multiple accounts, calculate each one separately and enter each account’s balance with its corresponding age. For IRAs, you may satisfy the combined IRA RMD requirement from any single IRA or any combination of IRAs — so the total matters even if you run the calculator account by account.

The Penalty for Missing an RMD

Failing to take the full RMD by the deadline triggers a federal excise tax. Under the SECURE 2.0 Act, this penalty was reduced from 50% to 25% of the amount that should have been — but was not — withdrawn. If the failure is corrected within two years, the penalty drops further to 10%. These rates apply to the shortfall, not the full account balance.

For any person at or past age 73 with significant tax-deferred balances, the RMD is a hard tax-calendar obligation that should be tracked annually. Custodians (the IRA or 401(k) institution) often send notices, but the obligation is the account owner’s regardless of whether a notice arrives.

Coordinating RMDs With Social Security and Other Income

RMDs are included in ordinary taxable income in the year they are taken. This has several planning implications:

Social Security taxation. Up to 85% of Social Security benefits may become taxable when “combined income” (adjusted gross income + non-taxable interest + 50% of Social Security benefits) exceeds certain thresholds ($25,000 single / $32,000 married filing jointly for the 25% inclusion rate; $34,000/$44,000 for the 85% rate). Large RMDs from significant balances push combined income upward and can increase the percentage of Social Security benefits subject to tax.

Medicare IRMAA. Medicare Part B and Part D premiums are income-tested. Higher modified adjusted gross income — which includes RMDs — can trigger Income-Related Monthly Adjustment Amount (IRMAA) surcharges. The surcharge thresholds adjust annually.

Roth conversions before age 73. Converting traditional IRA balances to Roth IRA balances in the years between retirement and age 73 reduces the future traditional IRA balance subject to RMDs. A larger Roth balance and smaller traditional balance can reduce future annual RMDs. Conversions themselves generate taxable income in the conversion year and should be planned carefully against the tax bracket; this is a strategy worth discussing with a tax advisor.

The Spouse Exception

There is one significant variation to the Uniform Lifetime Table rule: if a person’s sole beneficiary is a spouse who is more than 10 years younger, a different table — the Joint Life and Last Survivor Expectancy Table (IRS Table II, Publication 590-B) — may be used instead. This table produces a longer distribution period than the Uniform Lifetime Table, resulting in smaller annual RMDs.

The calculator on this site uses the Uniform Lifetime Table (Table III), which applies to the vast majority of account owners. The spouse exception applies only when the account’s sole beneficiary designation names a spouse more than 10 years younger — no other beneficiaries, not even other family members added as contingent beneficiaries, can appear on the account for the exception to hold.

Retirement Cluster: Related Calculators

The RMD is one component of retirement income planning. Related tools:

• Social Security Calculator — Estimates monthly Social Security retirement benefits at each claiming age 62–70.
• Retirement 401(k) Calculator — Projects the accumulation phase: how much a 401(k) balance grows over the working years.
• Roth IRA Contribution Limit Calculator — Roth balances are exempt from RMDs during the owner’s lifetime.
• 401(k) Early Withdrawal Penalty Calculator — Calculates the penalty and tax cost of withdrawing before 59½.
• FIRE Calculator — For early retirees planning a portfolio withdrawal strategy before Social Security and RMD age.

Frequently Asked Questions

Do I have to withdraw the RMD all at once? No. The only requirement is that the total amount withdrawn from the account(s) equals or exceeds the RMD for that calendar year. The withdrawal can be a lump sum, monthly installments, or any other schedule — the IRS cares only that the full minimum is distributed by December 31 (or April 1 for the first year).

Can I reinvest the RMD? Yes, after paying the taxes owed on it. The RMD itself is a taxable distribution — it must come out of the tax-deferred account. But you can use the after-tax proceeds however you choose, including reinvesting them in a taxable brokerage account, a bank account, or any other non-retirement vehicle. You cannot return an RMD to an IRA as a rollover.

What if the account lost value and the RMD exceeds the current balance? The RMD is calculated on the prior December 31 balance. If the account declined significantly in value during the following year, you may have to distribute more than the current account represents in buying power. There is no exception for market losses — the calculation is based on the December 31 figure regardless of subsequent performance.

Are inherited IRAs subject to RMDs? Inherited IRAs (whether traditional or Roth) follow different rules depending on the relationship between the original owner and the beneficiary, and whether the original owner died before or after their required beginning date. Non-spouse beneficiaries generally must withdraw the entire inherited IRA within 10 years under the SECURE Act rules. These inherited account rules are complex and outside the scope of this guide; the RMD calculator covers the account owner’s own distributions only.

Is a 401(k) from a current employer subject to RMDs? For a current employer’s plan, the RMD rules may be delayed while you are still working (if the plan allows and you own less than 5% of the company). Once you separate from that employer or retire, the normal age-73 start rule applies. IRAs and plans from former employers do not have this still-working exception.