By Christian BrinkleyLicensed NC Insurance Agent, NPN 22217190, NC Life & Health · Updated October 14, 2026 · 4 min read
You got a tax break when you put money into your 401(k) or traditional IRA. The IRS let that money grow for decades without taxing it. Eventually, the deal comes due. That is what required minimum distributions are about. RMDs are the government's way of saying: you have deferred taxes long enough, start taking money out so we can tax it.
What RMDs are
This is general information, not financial advice. RMD ages and rules have changed before and can change again.
A required minimum distribution is the smallest amount you must withdraw each year from certain tax-deferred retirement accounts once you reach a certain age. The amount is calculated from your account balance and your life expectancy.
The key word is minimum. You can always take out more. You just cannot take out less.
When they start
The starting age for RMDs has moved around over the years. Congress has raised it more than once, which tells you everything about how stable this number is.
In general terms, you must take your first RMD by a deadline in the year after you reach the starting age, and then every year after that. If you are still working for the employer that sponsors your 401(k), you may be able to delay RMDs from that plan until you actually retire. That exception does not apply to IRAs.
The penalty concept
Miss an RMD, or take less than required, and the IRS can hit the shortfall with a penalty tax. This is not a slap on the wrist. Historically the penalty has been a large percentage of the amount you should have withdrawn but did not.
If you realize you missed one, fix it as fast as you can and talk to a tax professional about the correction process. Speed matters.
How the amount gets calculated
Each year, you take your account balance as of the end of the previous year and divide it by a life expectancy factor the IRS publishes in tables. The result is your RMD for the year.
As you get older, the life expectancy factor shrinks, so the required withdrawal gets bigger relative to your balance. That is by design. The IRS wants the account drawn down over your lifetime, not passed along untouched.
Why RMDs mess with tax planning
RMDs can push you into a higher tax bracket in retirement, which surprises people. You spent your working years deferring taxes, and now forced withdrawals land on top of your Social Security and any other income.
They can also affect other things tied to your income. Higher income in retirement can mean higher Medicare premiums through IRMAA, and more of your Social Security becoming taxable. One forced withdrawal ripples outward.
Common mistakes
The biggest one is simply forgetting. People with several old 401(k)s scattered across former employers lose track. Consolidate or at least inventory every account well before RMD age.
Another is assuming the custodian will handle it. Some do calculate it for you and some even automate the withdrawal. Many do not. The legal responsibility is yours no matter what.
What to do now
If RMDs are years away, the move is awareness. Know which of your accounts will be subject to them. Keep beneficiaries updated, because inherited account rules are their own maze.
If RMDs are close, get precise. Confirm the current starting age at irs.gov. List every affected account. Decide whether consolidating makes tracking easier. Talk through Roth conversion timing with a tax pro while you still have low-income years to use.
This is general information, not financial advice. Check irs.gov for the current RMD ages, tables, and penalty rules.
Questions people ask me about this
What RMDs are?
This is general information, not financial advice. RMD ages and rules have changed before and can change again. A required minimum distribution is the smallest amount you must withdraw each year from certain tax-deferred retirement accounts once you reach a certain age.
When they start?
The starting age for RMDs has moved around over the years. Congress has raised it more than once, which tells you everything about how stable this number is. In general terms, you must take your first RMD by a deadline in the year after you reach the starting age, and then every year after that.
What is the penalty concept?
Miss an RMD, or take less than required, and the IRS can hit the shortfall with a penalty tax. This is not a slap on the wrist. Historically the penalty has been a large percentage of the amount you should have withdrawn but did not.
What should I know about the amount gets calculated?
Each year, you take your account balance as of the end of the previous year and divide it by a life expectancy factor the IRS publishes in tables. The result is your RMD for the year. As you get older, the life expectancy factor shrinks, so the required withdrawal gets bigger relative to your balance. That is by design.
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