What an RMD is
Money in a traditional IRA or workplace plan has never been taxed. The government wants that tax eventually, so once you reach a certain age you must take out a minimum amount every year. That yearly minimum is your required minimum distribution, or RMD. You can always take out more. You just cannot take out less without a penalty.
The IRS table
Your RMD is your December 31 balance divided by a number from the IRS Uniform Lifetime Table. The number falls each year, so the share you must take out rises as you age, from about 3.8% at 73 to about 8.2% at 90.
| Age | Divisor | Share of balance |
|---|---|---|
| 73 | 26.5 | 3.77% |
| 74 | 25.5 | 3.92% |
| 75 | 24.6 | 4.07% |
| 76 | 23.7 | 4.22% |
| 77 | 22.9 | 4.37% |
| 78 | 22 | 4.55% |
| 79 | 21.1 | 4.74% |
| 80 | 20.2 | 4.95% |
| 81 | 19.4 | 5.15% |
| 82 | 18.5 | 5.41% |
| 83 | 17.7 | 5.65% |
| 84 | 16.8 | 5.95% |
| 85 | 16 | 6.25% |
| 86 | 15.2 | 6.58% |
| 87 | 14.4 | 6.94% |
| 88 | 13.7 | 7.30% |
| 89 | 12.9 | 7.75% |
| 90 | 12.2 | 8.20% |
| 91 | 11.5 | 8.70% |
| 92 | 10.8 | 9.26% |
| 93 | 10.1 | 9.90% |
| 94 | 9.5 | 10.53% |
| 95 | 8.9 | 11.24% |
| 96 | 8.4 | 11.90% |
| 97 | 7.8 | 12.82% |
| 98 | 7.3 | 13.70% |
| 99 | 6.8 | 14.71% |
| 100 | 6.4 | 15.63% |
Ways to lower the tax bite
Give directly to charity. From 70½, you can send up to a yearly limit straight from your IRA to a charity. This qualified charitable distribution counts toward your RMD but is not taxed.
Convert some savings to Roth before RMDs start. Roth IRAs have no RMDs for the owner. Converting in the low-income years between retiring and 73 or 75 means paying tax at a lower rate now and smaller RMDs later.
Plan around your pension and Social Security. RMDs add to your taxable income, which can push more of your Social Security into the taxable range and raise Medicare premiums for people with high incomes. Seeing all your income together in My retirement plan helps.
Questions
When do I have to start RMDs?
Under current law, at 73 if you were born from 1951 to 1959, and at 75 if you were born in 1960 or later. Your first RMD can wait until April 1 of the year after you reach that age, but then you must take two in the same year.
Which accounts have RMDs?
Traditional IRAs, SEP and SIMPLE IRAs, and workplace plans such as 401(k), 403(b) and 457(b) plans. Roth IRAs have no RMDs for the original owner, and since 2024 Roth accounts inside workplace plans do not either.
How is my RMD figured?
Take your account balance on December 31 of last year and divide it by the distribution period for your age in the IRS Uniform Lifetime Table. At 75 the period is 24.6, so a $300,000 balance means an RMD of about $12,195.
What if I miss an RMD?
The IRS charges an excise tax of 25% of the amount you should have taken, cut to 10% if you fix it quickly. Take the missed amount as soon as you notice and file Form 5329.
Can I still work and delay my 401(k) RMD?
Often yes. If you still work for the employer that sponsors the plan and do not own 5% or more of the company, you can usually wait until you retire. This does not apply to IRAs.