Short answerA required minimum distribution is the smallest amount you must withdraw each year from tax-deferred retirement accounts like a traditional IRA or 401(k). RMDs start at age 73 under SECURE 2.0. The amount comes from your balance and a life-expectancy factor in IRS tables.
What an RMD is
Tax-deferred accounts let your money grow without yearly income tax. The IRS only deferred that tax. It did not cancel it. An RMD forces withdrawals to start so the tax gets collected over your retirement.
Roth IRAs have no RMDs while the original owner is alive. Traditional IRAs, 401(k)s, 403(b)s, and 457(b)s do.
When RMDs start
Under SECURE 2.0, RMDs begin at age 73 for people born between 1951 and 1959. Your first RMD is due by April 1 of the year after you turn 73. Every RMD after that is due by December 31.
Delaying the first one to April 1 means two withdrawals land in the same tax year. Both count as taxable income that year.
How the yearly math works
The IRS publishes life-expectancy tables in Publication 590-B. You find the factor for your age, then divide last December 31 balance by that factor.
Here is the arithmetic with round numbers: a $274,000 balance divided by a 27.4 factor gives a $10,000 RMD. The factor shrinks each year, so the required withdrawal grows as a share of the balance.
You can always withdraw more than the minimum. Extra withdrawals do not reduce future RMDs.
If you miss one
The IRS charges an excise tax on the amount you failed to withdraw. Under SECURE 2.0 that penalty is 25% of the shortfall. It drops to 10% when you correct the mistake within two years.
This page explains the concept. It is not tax advice for your situation.
Sources
- IRS: Retirement plan and IRA required minimum distributions FAQs
- SECURE 2.0 Act of 2022 (RMD age raised to 73)
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